Correlation Between Kingfisher Plc and Wal Mart

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

By analyzing existing cross correlation between Kingfisher plc and Wal Mart de, you can compare the effects of market volatilities on Kingfisher Plc and Wal Mart 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 Kingfisher Plc with a short position of Wal Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingfisher Plc and Wal Mart.

Diversification Opportunities for Kingfisher Plc and Wal Mart

0.62

Correlation Coefficient

Kingfisher Plc  Wal Mart

Poor diversification

The 3 months correlation between Kingfisher and Wal is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Kingfisher plc and Wal Mart de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wal Mart de and Kingfisher Plc 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 Kingfisher plc are associated (or correlated) with Wal Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wal Mart de has no effect on the direction of Kingfisher Plc i.e., Kingfisher Plc and Wal Mart go up and down completely randomly.

Pair Corralation between Kingfisher Plc and Wal Mart

Assuming the 90 days horizon Kingfisher plc is expected to generate 1.39 times more return on investment than Wal Mart. However, Kingfisher Plc is 1.39 times more volatile than Wal Mart de. It trades about 0.01 of its potential returns per unit of risk. Wal Mart de is currently generating about -0.02 per unit of risk. If you would invest  349.00  in Kingfisher plc on September 28, 2024 and sell it today you would lose (9.00) from holding Kingfisher plc or give up 2.58% of portfolio value over 90 days.

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

Kingfisher plc  vs.  Wal Mart de

Kingfisher plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingfisher plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Wal Mart de

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wal Mart de are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Wal Mart is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kingfisher Plc and Wal Mart

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

The idea behind Kingfisher plc and Wal Mart de 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.