Correlation Between Walmart and Clearbridge Energy

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

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

Diversification Opportunities for Walmart and Clearbridge Energy

0.45

Correlation Coefficient

Walmart  Clearbridge Energy

Very weak diversification

The 3 months correlation between Walmart and Clearbridge is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Clearbridge Energy Mlp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Energy Mlp 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 Clearbridge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Energy Mlp has no effect on the direction of Walmart i.e., Walmart and Clearbridge Energy go up and down completely randomly.

Pair Corralation between Walmart and Clearbridge Energy

Considering the 90-day investment horizon Walmart is expected to generate 1.09 times more return on investment than Clearbridge Energy. However, Walmart is 1.09 times more volatile than Clearbridge Energy Mlp. It trades about 0.05 of its potential returns per unit of risk. Clearbridge Energy Mlp is currently generating about -0.03 per unit of risk. If you would invest  9,230  in Walmart on November 29, 2024 and sell it today you would earn a total of  390.00  from holding Walmart or generate 4.23% return on investment over 90 days.

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

Walmart  vs.  Clearbridge Energy Mlp

Walmart

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Walmart is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Clearbridge Energy Mlp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clearbridge Energy Mlp has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy primary indicators, Clearbridge Energy is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Walmart and Clearbridge Energy

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

The idea behind Walmart and Clearbridge Energy Mlp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.