Correlation Between Walmart and Spectrum Brands

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

Diversification Opportunities for Walmart and Spectrum Brands

-0.65
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Walmart and Spectrum is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Spectrum Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Brands Holdings 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 Spectrum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Brands Holdings has no effect on the direction of Walmart i.e., Walmart and Spectrum Brands go up and down completely randomly.

Pair Corralation between Walmart and Spectrum Brands

Considering the 90-day investment horizon Walmart is expected to generate 0.31 times more return on investment than Spectrum Brands. However, Walmart is 3.26 times less risky than Spectrum Brands. It trades about -0.04 of its potential returns per unit of risk. Spectrum Brands Holdings is currently generating about -0.5 per unit of risk. 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

Walmart  vs.  Spectrum Brands Holdings

 Performance (%) 
       Timeline  
Walmart 
Walmart Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 3 (%) 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 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 and Spectrum Brands Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walmart and Spectrum Brands

The main advantage of trading using opposite Walmart and Spectrum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Spectrum Brands 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 Spectrum Brands will offset losses from the drop in Spectrum Brands' long position.
Walmart vs. BUSHVELD MINERALS LTD
The idea behind Walmart and Spectrum Brands Holdings 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.
Spectrum Brands vs. Sigma Lithium Corp
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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