Correlation Between Spectrum Brands and Walmart

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Can any of the company-specific risk be diversified away by investing in both Spectrum Brands 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 Spectrum Brands and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spectrum Brands Holdings and Walmart, you can compare the effects of market volatilities on Spectrum Brands 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 Spectrum Brands with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectrum Brands and Walmart.

Diversification Opportunities for Spectrum Brands and Walmart

-0.65
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Spectrum and Walmart is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Brands Holdings and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Spectrum Brands 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 Spectrum Brands Holdings 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 has no effect on the direction of Spectrum Brands i.e., Spectrum Brands and Walmart go up and down completely randomly.

Pair Corralation between Spectrum Brands and Walmart

Considering the 90-day investment horizon Spectrum Brands Holdings is expected to under-perform the Walmart. In addition to that, Spectrum Brands is 3.26 times more volatile than Walmart. It trades about -0.5 of its total potential returns per unit of risk. Walmart is currently generating about -0.04 per unit of volatility. If you would invest  13,160  in Walmart on June 27, 2022 and sell it today you would lose (154.00)  from holding Walmart or give up 1.17% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Spectrum Brands Holdings  vs.  Walmart

 Performance (%) 
       Timeline  
Spectrum Brands Holdings 
Spectrum Performance
0 of 100
Over the last 90 days Spectrum Brands Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite sluggish performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Spectrum Price Channel

Walmart 
Walmart Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Walmart Price Channel

Spectrum Brands and Walmart Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Spectrum Brands and Walmart

The main advantage of trading using opposite Spectrum Brands and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spectrum Brands 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.
Spectrum Brands vs. Sigma Lithium Corp
The idea behind Spectrum Brands Holdings and Walmart 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.
Walmart vs. BUSHVELD MINERALS LTD
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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