Correlation Between Panasonic Corp and Walmart

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

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

Diversification Opportunities for Panasonic Corp and Walmart

0.6

Correlation Coefficient

Panasonic Corp  Walmart

Poor diversification

The 3 months correlation between Panasonic and Walmart is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Panasonic Corp and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Panasonic Corp 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 Panasonic Corp are associated (or correlated) with Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Panasonic Corp i.e., Panasonic Corp and Walmart go up and down completely randomly.

Pair Corralation between Panasonic Corp and Walmart

Assuming the 90 days trading horizon Panasonic Corp is expected to generate 58.5 times more return on investment than Walmart. However, Panasonic Corp is 58.5 times more volatile than Walmart. It trades about 0.28 of its potential returns per unit of risk. Walmart is currently generating about 0.12 per unit of risk. If you would invest  128,600  in Panasonic Corp on September 25, 2024 and sell it today you would earn a total of  33,300  from holding Panasonic Corp or generate 25.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	51.56%
Values	Daily Returns

Panasonic Corp  vs.  Walmart

Panasonic Corp

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Panasonic Corp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Panasonic Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Walmart

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Walmart is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Panasonic Corp and Walmart

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

The idea behind Panasonic Corp and Walmart 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.