Correlation Between PPL and WPLAU

Can any of the company-specific risk be diversified away by investing in both PPL and WPLAU at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PPL and WPLAU into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PPL Corporation and WPLAU 365 05 MAR 25, you can compare the effects of market volatilities on PPL and WPLAU and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PPL with a short position of WPLAU. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPL and WPLAU.

Diversification Opportunities for PPL and WPLAU

0.14

Correlation Coefficient

PPL  WPLAU

Average diversification

The 3 months correlation between PPL and WPLAU is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding PPL Corp. and WPLAU 365 05 MAR 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPLAU 365 05 and PPL is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PPL Corporation are associated (or correlated) with WPLAU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPLAU 365 05 has no effect on the direction of PPL i.e., PPL and WPLAU go up and down completely randomly.

Pair Corralation between PPL and WPLAU

Considering the 90-day investment horizon PPL Corporation is expected to generate 15.3 times more return on investment than WPLAU. However, PPL is 15.3 times more volatile than WPLAU 365 05 MAR 25. It trades about 0.02 of its potential returns per unit of risk. WPLAU 365 05 MAR 25 is currently generating about 0.16 per unit of risk. If you would invest  3,287  in PPL Corporation on October 23, 2024 and sell it today you would earn a total of  38.00  from holding PPL Corporation or generate 1.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	56.67%
Values	Daily Returns

PPL Corp.  vs.  WPLAU 365 05 MAR 25

PPL Corporation

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PPL Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, PPL is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

WPLAU 365 05

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WPLAU 365 05 MAR 25 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, WPLAU is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PPL and WPLAU

The main advantage of trading using opposite PPL and WPLAU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPL position performs unexpectedly, WPLAU can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in WPLAU will offset losses from the drop in WPLAU's long position.

The idea behind PPL Corporation and WPLAU 365 05 MAR 25 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.