Correlation Between Walmart and Fidelity International

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

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

Diversification Opportunities for Walmart and Fidelity International

-0.51

Correlation Coefficient

Walmart  Fidelity International

Excellent diversification

The 3 months correlation between Walmart and Fidelity is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Fidelity International Multifa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International 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 Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of Walmart i.e., Walmart and Fidelity International go up and down completely randomly.

Pair Corralation between Walmart and Fidelity International

Considering the 90-day investment horizon Walmart is expected to generate 1.7 times more return on investment than Fidelity International. However, Walmart is 1.7 times more volatile than Fidelity International Multifactor. It trades about 0.2 of its potential returns per unit of risk. Fidelity International Multifactor is currently generating about 0.04 per unit of risk. If you would invest  5,942  in Walmart on October 12, 2024 and sell it today you would earn a total of  3,238  from holding Walmart or generate 54.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.47%
Values	Daily Returns

Walmart  vs.  Fidelity International Multifa

Walmart

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fidelity International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity International Multifactor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Fidelity International is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Walmart and Fidelity International

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

The idea behind Walmart and Fidelity International Multifactor 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.