Correlation Between Walmart and SPDR Kensho

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

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

Diversification Opportunities for Walmart and SPDR Kensho

0.24

Correlation Coefficient

Walmart  SPDR Kensho

Modest diversification

The 3 months correlation between Walmart and SPDR is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and SPDR Kensho Intelligent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Kensho Intelligent 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 Kensho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Kensho Intelligent has no effect on the direction of Walmart i.e., Walmart and SPDR Kensho go up and down completely randomly.

Pair Corralation between Walmart and SPDR Kensho

Considering the 90-day investment horizon Walmart is expected to generate 1.57 times more return on investment than SPDR Kensho. However, Walmart is 1.57 times more volatile than SPDR Kensho Intelligent. It trades about -0.04 of its potential returns per unit of risk. SPDR Kensho Intelligent is currently generating about -0.11 per unit of risk. If you would invest  9,035  in Walmart on December 21, 2024 and sell it today you would lose (454.00) from holding Walmart or give up 5.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Walmart  vs.  SPDR Kensho Intelligent

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

SPDR Kensho Intelligent

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR Kensho Intelligent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

Pair Trading with Walmart and SPDR Kensho

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

The idea behind Walmart and SPDR Kensho Intelligent 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.