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

-0.61

Correlation Coefficient

Walmart  IndexIQ

Excellent diversification

The 3 months correlation between Walmart and IndexIQ is -0.61. 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 1.28 times more return on investment than IndexIQ. However, Walmart is 1.28 times more volatile than IndexIQ. It trades about 0.14 of its potential returns per unit of risk. IndexIQ is currently generating about 0.04 per unit of risk. If you would invest  4,504  in Walmart on October 10, 2024 and sell it today you would earn a total of  4,577  from holding Walmart or generate 101.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.94%
Values	Daily Returns

Walmart  vs.  IndexIQ

Walmart

Risk-Adjusted Performance

16 of 100

Good

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

IndexIQ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IndexIQ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Etf's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

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.

The idea behind Walmart and IndexIQ 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.