Correlation Between Walmart and Pekin Life

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

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

Diversification Opportunities for Walmart and Pekin Life

0.95

Correlation Coefficient

Walmart  Pekin Life

Almost no diversification

The 3 months correlation between Walmart and Pekin is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Pekin Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pekin Life Insurance 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 Pekin Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pekin Life Insurance has no effect on the direction of Walmart i.e., Walmart and Pekin Life go up and down completely randomly.

Pair Corralation between Walmart and Pekin Life

Considering the 90-day investment horizon Walmart is expected to generate 4.36 times more return on investment than Pekin Life. However, Walmart is 4.36 times more volatile than Pekin Life Insurance. It trades about 0.18 of its potential returns per unit of risk. Pekin Life Insurance is currently generating about 0.13 per unit of risk. If you would invest  8,109  in Walmart on October 1, 2024 and sell it today you would earn a total of  1,057  from holding Walmart or generate 13.03% return on investment over 90 days.

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

Walmart  vs.  Pekin Life Insurance

Walmart

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 14 (%) 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.

Pekin Life Insurance

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pekin Life Insurance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Pekin Life is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Walmart and Pekin Life

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

The idea behind Walmart and Pekin Life Insurance 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.