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 Software, 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
Almost no diversification
The 3 months correlation between Walmart and SPDR is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and SPDR SP Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Software 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 Software 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 1.13 times less return on investment than SPDR SP. But when comparing it to its historical volatility, Walmart is 1.73 times less risky than SPDR SP. It trades about 0.49 of its potential returns per unit of risk. SPDR SP Software is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 17,021 in SPDR SP Software on August 30, 2024 and sell it today you would earn a total of 2,372 from holding SPDR SP Software or generate 13.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. SPDR SP Software
Performance |
| Timeline |
| Walmart |
| SPDR SP Software |
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. Weis Markets | Walmart vs. Ingles Markets Incorporated | Walmart vs. Sendas Distribuidora SA | Walmart vs. Grocery Outlet Holding |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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