Correlation Between PROSIEBENSAT1 MEDIADR4/ and Wal-Mart

Can any of the company-specific risk be diversified away by investing in both PROSIEBENSAT1 MEDIADR4/ and Wal-Mart 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 PROSIEBENSAT1 MEDIADR4/ and Wal-Mart into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PROSIEBENSAT1 MEDIADR4 and Wal Mart de Mxico, you can compare the effects of market volatilities on PROSIEBENSAT1 MEDIADR4/ and Wal-Mart 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 PROSIEBENSAT1 MEDIADR4/ with a short position of Wal-Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROSIEBENSAT1 MEDIADR4/ and Wal-Mart.

Diversification Opportunities for PROSIEBENSAT1 MEDIADR4/ and Wal-Mart

-0.75

Correlation Coefficient

PROSIEBENSAT1 MEDIADR4/  Wal-Mart

Pay attention - limited upside

The 3 months correlation between PROSIEBENSAT1 and Wal-Mart is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding PROSIEBENSAT1 MEDIADR4 and Wal Mart de Mxico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wal Mart de and PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4 are associated (or correlated) with Wal-Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wal Mart de has no effect on the direction of PROSIEBENSAT1 MEDIADR4/ i.e., PROSIEBENSAT1 MEDIADR4/ and Wal-Mart go up and down completely randomly.

Pair Corralation between PROSIEBENSAT1 MEDIADR4/ and Wal-Mart

Assuming the 90 days trading horizon PROSIEBENSAT1 MEDIADR4 is expected to under-perform the Wal-Mart. But the stock apears to be less risky and, when comparing its historical volatility, PROSIEBENSAT1 MEDIADR4 is 1.87 times less risky than Wal-Mart. The stock trades about -0.02 of its potential returns per unit of risk. The Wal Mart de Mxico is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  83.00  in Wal Mart de Mxico on October 24, 2024 and sell it today you would earn a total of  173.00  from holding Wal Mart de Mxico or generate 208.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.75%
Values	Daily Returns

PROSIEBENSAT1 MEDIADR4  vs.  Wal Mart de Mxico

PROSIEBENSAT1 MEDIADR4/

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PROSIEBENSAT1 MEDIADR4 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Wal Mart de

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wal Mart de Mxico are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Wal-Mart reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PROSIEBENSAT1 MEDIADR4/ and Wal-Mart

The main advantage of trading using opposite PROSIEBENSAT1 MEDIADR4/ and Wal-Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PROSIEBENSAT1 MEDIADR4/ position performs unexpectedly, Wal-Mart 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 Wal-Mart will offset losses from the drop in Wal-Mart's long position.

The idea behind PROSIEBENSAT1 MEDIADR4 and Wal Mart de Mxico 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.

Check out your portfolio center.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.