Correlation Between Walmart and CCFNB Bancorp

Can any of the company-specific risk be diversified away by investing in both Walmart and CCFNB Bancorp 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 Walmart and CCFNB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walmart and CCFNB Bancorp, you can compare the effects of market volatilities on Walmart and CCFNB Bancorp 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 Walmart with a short position of CCFNB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and CCFNB Bancorp.

Diversification Opportunities for Walmart and CCFNB Bancorp

0.86

Correlation Coefficient

Walmart  CCFNB Bancorp

Very poor diversification

The 3 months correlation between Walmart and CCFNB is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and CCFNB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCFNB Bancorp and Walmart 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 Walmart are associated (or correlated) with CCFNB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCFNB Bancorp has no effect on the direction of Walmart i.e., Walmart and CCFNB Bancorp go up and down completely randomly.

Pair Corralation between Walmart and CCFNB Bancorp

Considering the 90-day investment horizon Walmart is expected to generate 6.21 times less return on investment than CCFNB Bancorp. But when comparing it to its historical volatility, Walmart is 3.02 times less risky than CCFNB Bancorp. It trades about 0.11 of its potential returns per unit of risk. CCFNB Bancorp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  3,617  in CCFNB Bancorp on September 23, 2024 and sell it today you would earn a total of  514.00  from holding CCFNB Bancorp or generate 14.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Walmart  vs.  CCFNB Bancorp

Walmart

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

CCFNB Bancorp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CCFNB Bancorp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, CCFNB Bancorp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and CCFNB Bancorp

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

The idea behind Walmart and CCFNB Bancorp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.