Correlation Between Sparx Technology and Walmart

Can any of the company-specific risk be diversified away by investing in both Sparx Technology and Walmart 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 Sparx Technology and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sparx Technology and Walmart Inc CDR, you can compare the effects of market volatilities on Sparx Technology and Walmart 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 Sparx Technology with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparx Technology and Walmart.

Diversification Opportunities for Sparx Technology and Walmart

0.91

Correlation Coefficient

Sparx Technology  Walmart

Almost no diversification

The 3 months correlation between Sparx and Walmart is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Sparx Technology and Walmart Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart Inc CDR and Sparx Technology 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 Sparx Technology are associated (or correlated) with Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart Inc CDR has no effect on the direction of Sparx Technology i.e., Sparx Technology and Walmart go up and down completely randomly.

Pair Corralation between Sparx Technology and Walmart

Assuming the 90 days trading horizon Sparx Technology is expected to generate 2.26 times more return on investment than Walmart. However, Sparx Technology is 2.26 times more volatile than Walmart Inc CDR. It trades about 0.04 of its potential returns per unit of risk. Walmart Inc CDR is currently generating about -0.22 per unit of risk. If you would invest  2,776  in Sparx Technology on October 6, 2024 and sell it today you would earn a total of  37.00  from holding Sparx Technology or generate 1.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.0%
Values	Daily Returns

Sparx Technology  vs.  Walmart Inc CDR

Sparx Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sparx Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sparx Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Walmart Inc CDR

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Walmart displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sparx Technology and Walmart

The main advantage of trading using opposite Sparx Technology and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparx Technology position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position.

The idea behind Sparx Technology and Walmart Inc CDR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.