Correlation Between Spectrum Brands and Walmart
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
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Spectrum and Walmart is 0.49. 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 is expected to generate 2.13 times less return on investment than Walmart. In addition to that, Spectrum Brands is 1.96 times more volatile than Walmart. It trades about 0.05 of its total potential returns per unit of risk. Walmart is currently generating about 0.19 per unit of volatility. If you would invest 5,332 in Walmart on January 24, 2024 and sell it today you would earn a total of 577.00 from holding Walmart or generate 10.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spectrum Brands Holdings vs. Walmart
Performance |
| Timeline |
| Spectrum Brands Holdings |
| Walmart |
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. Unilever PLC ADR | Spectrum Brands vs. Estee Lauder Companies | Spectrum Brands vs. ELF Beauty | Spectrum Brands vs. Coty Inc |
| Walmart vs. Big Lots | Walmart vs. Aquagold International | Walmart vs. Thrivent High Yield | Walmart vs. Morningstar Unconstrained Allocation |
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 the Commodity Directory module to find actively traded commodities issued by global exchanges.
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