Correlation Between Walmart and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Walmart and SPDR SP 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 SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and SPDR SP Pharmaceuticals, you can compare the effects of market volatilities on Walmart and SPDR SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and SPDR SP.
Diversification Opportunities for Walmart and SPDR SP
Very weak diversification
The 3 months correlation between Walmart and SPDR is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and SPDR SP Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Pharmaceuticals 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Pharmaceuticals has no effect on the direction of Walmart i.e., Walmart and SPDR SP go up and down completely randomly.
Pair Corralation between Walmart and SPDR SP
Considering the 90-day investment horizon Walmart is expected to generate 0.97 times more return on investment than SPDR SP. However, Walmart is 1.03 times less risky than SPDR SP. It trades about 0.13 of its potential returns per unit of risk. SPDR SP Pharmaceuticals is currently generating about 0.02 per unit of risk. If you would invest 4,838 in Walmart on August 29, 2024 and sell it today you would earn a total of 4,293 from holding Walmart or generate 88.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. SPDR SP Pharmaceuticals
Performance |
| Timeline |
| Walmart |
| SPDR SP Pharmaceuticals |
Walmart and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and SPDR SP
The main advantage of trading using opposite Walmart and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, SPDR SP 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 SP will offset losses from the drop in SPDR SP's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| SPDR SP vs. iShares Pharmaceuticals ETF | SPDR SP vs. Invesco Dynamic Pharmaceuticals | SPDR SP vs. SPDR SP Health | SPDR SP vs. SPDR SP Health |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Stocks Directory Find actively traded stocks across global markets |