Correlation Between Walmart and Cyberlux Corp

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

By analyzing existing cross correlation between Walmart and Cyberlux Corp, you can compare the effects of market volatilities on Walmart and Cyberlux Corp 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 Cyberlux Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Cyberlux Corp.

Diversification Opportunities for Walmart and Cyberlux Corp

-0.35

Correlation Coefficient

Walmart  Cyberlux Corp

Very good diversification

The 3 months correlation between Walmart and Cyberlux is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Cyberlux Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyberlux Corp 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 Cyberlux Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyberlux Corp has no effect on the direction of Walmart i.e., Walmart and Cyberlux Corp go up and down completely randomly.

Pair Corralation between Walmart and Cyberlux Corp

Considering the 90-day investment horizon Walmart is expected to generate 2.8 times less return on investment than Cyberlux Corp. But when comparing it to its historical volatility, Walmart is 10.32 times less risky than Cyberlux Corp. It trades about 0.2 of its potential returns per unit of risk. Cyberlux Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1.04  in Cyberlux Corp on October 8, 2024 and sell it today you would earn a total of  0.03  from holding Cyberlux Corp or generate 2.88% return on investment over 90 days.

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

Walmart  vs.  Cyberlux Corp

Walmart

Risk-Adjusted Performance

16 of 100

Good

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.

Cyberlux Corp

Risk-Adjusted Performance

4 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cyberlux Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, Cyberlux Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Cyberlux Corp

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

The idea behind Walmart and Cyberlux Corp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.