Correlation Between Walmart and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both Walmart and SPDR Portfolio 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 Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and SPDR Portfolio Corporate, you can compare the effects of market volatilities on Walmart and SPDR Portfolio 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 Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and SPDR Portfolio.
Diversification Opportunities for Walmart and SPDR Portfolio
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and SPDR is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and SPDR Portfolio Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio Corporate 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 Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio Corporate has no effect on the direction of Walmart i.e., Walmart and SPDR Portfolio go up and down completely randomly.
Pair Corralation between Walmart and SPDR Portfolio
Considering the 90-day investment horizon Walmart is expected to generate 2.93 times more return on investment than SPDR Portfolio. However, Walmart is 2.93 times more volatile than SPDR Portfolio Corporate. It trades about 0.23 of its potential returns per unit of risk. SPDR Portfolio Corporate is currently generating about -0.16 per unit of risk. If you would invest 8,140 in Walmart on August 26, 2024 and sell it today you would earn a total of 904.00 from holding Walmart or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. SPDR Portfolio Corporate
Performance |
| Timeline |
| Walmart |
| SPDR Portfolio Corporate |
Walmart and SPDR Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and SPDR Portfolio
The main advantage of trading using opposite Walmart and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, SPDR Portfolio 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 Portfolio will offset losses from the drop in SPDR Portfolio'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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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