Correlation Between Ligand Pharmaceuticals and Walmart
Can any of the company-specific risk be diversified away by investing in both Ligand Pharmaceuticals 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 Ligand Pharmaceuticals and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ligand Pharmaceuticals Tr and Walmart, you can compare the effects of market volatilities on Ligand Pharmaceuticals 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 Ligand Pharmaceuticals with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ligand Pharmaceuticals and Walmart.
Diversification Opportunities for Ligand Pharmaceuticals and Walmart
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ligand and Walmart is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ligand Pharmaceuticals Tr and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Ligand Pharmaceuticals 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 Ligand Pharmaceuticals Tr 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 Ligand Pharmaceuticals i.e., Ligand Pharmaceuticals and Walmart go up and down completely randomly.
Pair Corralation between Ligand Pharmaceuticals and Walmart
Assuming the 90 days horizon Ligand Pharmaceuticals Tr is expected to generate 12.37 times more return on investment than Walmart. However, Ligand Pharmaceuticals is 12.37 times more volatile than Walmart. It trades about 0.05 of its potential returns per unit of risk. Walmart is currently generating about 0.08 per unit of risk. If you would invest 11.00 in Ligand Pharmaceuticals Tr on January 19, 2024 and sell it today you would lose (1.00) from holding Ligand Pharmaceuticals Tr or give up 9.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 23.92% |
| Values | Daily Returns |
Ligand Pharmaceuticals Tr vs. Walmart
Performance |
| Timeline |
| Ligand Pharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Walmart |
Ligand Pharmaceuticals and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ligand Pharmaceuticals and Walmart
The main advantage of trading using opposite Ligand Pharmaceuticals and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ligand Pharmaceuticals 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.| Ligand Pharmaceuticals vs. Group Ten Metals | Ligand Pharmaceuticals vs. Ascendant Resources | Ligand Pharmaceuticals vs. Atico Mining | Ligand Pharmaceuticals vs. Prime Mining Corp |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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