Correlation Between Walmart and IndexIQ
Can any of the company-specific risk be diversified away by investing in both Walmart and IndexIQ 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 IndexIQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and IndexIQ, you can compare the effects of market volatilities on Walmart and IndexIQ 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 IndexIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and IndexIQ.
Diversification Opportunities for Walmart and IndexIQ
Very good diversification
The 3 months correlation between Walmart and IndexIQ is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ 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 IndexIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ has no effect on the direction of Walmart i.e., Walmart and IndexIQ go up and down completely randomly.
Pair Corralation between Walmart and IndexIQ
Considering the 90-day investment horizon Walmart is expected to generate 0.06 times more return on investment than IndexIQ. However, Walmart is 16.17 times less risky than IndexIQ. It trades about 0.13 of its potential returns per unit of risk. IndexIQ is currently generating about -0.17 per unit of risk. If you would invest 4,796 in Walmart on September 3, 2024 and sell it today you would earn a total of 4,454 from holding Walmart or generate 92.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 7.07% |
| Values | Daily Returns |
Walmart vs. IndexIQ
Performance |
| Timeline |
| Walmart |
| IndexIQ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Walmart and IndexIQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and IndexIQ
The main advantage of trading using opposite Walmart and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, IndexIQ 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 IndexIQ will offset losses from the drop in IndexIQ's long position.| Walmart vs. Partner Communications | Walmart vs. Merck Company | Walmart vs. Western Midstream Partners | Walmart vs. Edgewise Therapeutics |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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