Correlation Between Walmart and 26442UAB0

Can any of the company-specific risk be diversified away by investing in both Walmart and 26442UAB0 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 26442UAB0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walmart and DUKE ENERGY PROGRESS, you can compare the effects of market volatilities on Walmart and 26442UAB0 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 26442UAB0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and 26442UAB0.

Diversification Opportunities for Walmart and 26442UAB0

-0.34

Correlation Coefficient

Walmart  26442UAB0

Very good diversification

The 3 months correlation between Walmart and 26442UAB0 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and DUKE ENERGY PROGRESS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE ENERGY PROGRESS 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 26442UAB0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUKE ENERGY PROGRESS has no effect on the direction of Walmart i.e., Walmart and 26442UAB0 go up and down completely randomly.

Pair Corralation between Walmart and 26442UAB0

Considering the 90-day investment horizon Walmart is expected to under-perform the 26442UAB0. In addition to that, Walmart is 2.28 times more volatile than DUKE ENERGY PROGRESS. It trades about -0.07 of its total potential returns per unit of risk. DUKE ENERGY PROGRESS is currently generating about 0.03 per unit of volatility. If you would invest  8,108  in DUKE ENERGY PROGRESS on December 26, 2024 and sell it today you would earn a total of  72.00  from holding DUKE ENERGY PROGRESS or generate 0.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.33%
Values	Daily Returns

Walmart  vs.  DUKE ENERGY PROGRESS

Walmart

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walmart has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

DUKE ENERGY PROGRESS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DUKE ENERGY PROGRESS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 26442UAB0 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walmart and 26442UAB0

The main advantage of trading using opposite Walmart and 26442UAB0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, 26442UAB0 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 26442UAB0 will offset losses from the drop in 26442UAB0's long position.

The idea behind Walmart and DUKE ENERGY PROGRESS 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.