Target and Wal Mart returns versus S&P 500

Mini Case.

a-b) The holding period returns for the S&P 500, Wal-Mart and Target over the time period to June 2009 are as follows:

S&P 500

Wal Mart

Target

Holding Period Return

Avg Monthly Return

Standard Deviation

c)

d) There was a significant difference between the returns of Wal Mart at the returns of the S&P500, whereas there was a much closer relationship between Target and the S&P. During this period, both Walmart and the S&P showed about the same amount of volatility but they often moved in different directions. In comparison, Target often moved in the same direction as the S&P, but it had quite a bit more volatility.

e)

Allocation

Return

Walmart

Target

Total Return

f) The two-stock portfolio versus the S&P is as follows:

This graph shows the portfolio performing much closer to the S&P – it is still a little bit more volatile, but the returns are much closer, as Wal-Mart's stability helps to counter the high level of volatility that Target has.