Correlation Between Walmart and SPDR SSgA

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

By analyzing existing cross correlation between Walmart and SPDR SSgA Ultra, you can compare the effects of market volatilities on Walmart and SPDR SSgA 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 SSgA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and SPDR SSgA.

Diversification Opportunities for Walmart and SPDR SSgA

-0.25

Correlation Coefficient

Walmart  SPDR SSgA

Very good diversification

The 3 months correlation between Walmart and SPDR is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and SPDR SSgA Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSgA Ultra 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 SSgA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSgA Ultra has no effect on the direction of Walmart i.e., Walmart and SPDR SSgA go up and down completely randomly.

Pair Corralation between Walmart and SPDR SSgA

Considering the 90-day investment horizon Walmart is expected to under-perform the SPDR SSgA. In addition to that, Walmart is 18.03 times more volatile than SPDR SSgA Ultra. It trades about -0.05 of its total potential returns per unit of risk. SPDR SSgA Ultra is currently generating about 0.19 per unit of volatility. If you would invest  4,006  in SPDR SSgA Ultra on December 27, 2024 and sell it today you would earn a total of  46.00  from holding SPDR SSgA Ultra or generate 1.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Walmart  vs.  SPDR SSgA Ultra

Walmart

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walmart has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Walmart is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

SPDR SSgA Ultra

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SSgA Ultra are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SPDR SSgA is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Walmart and SPDR SSgA

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

The idea behind Walmart and SPDR SSgA Ultra 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.