Correlation Between Walmart and DBX ETF
Can any of the company-specific risk be diversified away by investing in both Walmart and DBX ETF 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 DBX ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and DBX ETF Trust, you can compare the effects of market volatilities on Walmart and DBX ETF 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 DBX ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and DBX ETF.
Diversification Opportunities for Walmart and DBX ETF
Very poor diversification
The 3 months correlation between Walmart and DBX is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and DBX ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBX ETF Trust 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 DBX ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBX ETF Trust has no effect on the direction of Walmart i.e., Walmart and DBX ETF go up and down completely randomly.
Pair Corralation between Walmart and DBX ETF
Considering the 90-day investment horizon Walmart is expected to generate 1.61 times more return on investment than DBX ETF. However, Walmart is 1.61 times more volatile than DBX ETF Trust. It trades about 0.53 of its potential returns per unit of risk. DBX ETF Trust is currently generating about 0.43 per unit of risk. If you would invest 8,245 in Walmart on September 3, 2024 and sell it today you would earn a total of 1,005 from holding Walmart or generate 12.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. DBX ETF Trust
Performance |
| Timeline |
| Walmart |
| DBX ETF Trust |
Walmart and DBX ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and DBX ETF
The main advantage of trading using opposite Walmart and DBX ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, DBX ETF 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 DBX ETF will offset losses from the drop in DBX ETF's long position.| Walmart vs. Partner Communications | Walmart vs. Merck Company | Walmart vs. Western Midstream Partners | Walmart vs. Edgewise Therapeutics |
| DBX ETF vs. SPDR MSCI USA | DBX ETF vs. American Century STOXX | DBX ETF vs. Hartford Multifactor Equity | DBX ETF vs. PIMCO RAFI Dynamic |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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