Correlation Between Walmart and SPDR Galaxy
Can any of the company-specific risk be diversified away by investing in both Walmart and SPDR Galaxy 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 SPDR Galaxy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and SPDR Galaxy Digital, you can compare the effects of market volatilities on Walmart and SPDR Galaxy 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 SPDR Galaxy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and SPDR Galaxy.
Diversification Opportunities for Walmart and SPDR Galaxy
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and SPDR is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and SPDR Galaxy Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Galaxy Digital 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 SPDR Galaxy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Galaxy Digital has no effect on the direction of Walmart i.e., Walmart and SPDR Galaxy go up and down completely randomly.
Pair Corralation between Walmart and SPDR Galaxy
Considering the 90-day investment horizon Walmart is expected to generate 0.33 times more return on investment than SPDR Galaxy. However, Walmart is 3.05 times less risky than SPDR Galaxy. It trades about 0.47 of its potential returns per unit of risk. SPDR Galaxy Digital is currently generating about -0.03 per unit of risk. If you would invest 8,499 in Walmart on September 13, 2024 and sell it today you would earn a total of 997.00 from holding Walmart or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Walmart vs. SPDR Galaxy Digital
Performance |
| Timeline |
| Walmart |
| SPDR Galaxy Digital |
Walmart and SPDR Galaxy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and SPDR Galaxy
The main advantage of trading using opposite Walmart and SPDR Galaxy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, SPDR Galaxy 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 SPDR Galaxy will offset losses from the drop in SPDR Galaxy's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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