Correlation Between Walmart and Fidelity Dividend

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

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

Diversification Opportunities for Walmart and Fidelity Dividend

0.79

Correlation Coefficient

Walmart  Fidelity Dividend

Poor diversification

The 3 months correlation between Walmart and Fidelity is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Fidelity Dividend ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Dividend ETF 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 Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Dividend ETF has no effect on the direction of Walmart i.e., Walmart and Fidelity Dividend go up and down completely randomly.

Pair Corralation between Walmart and Fidelity Dividend

Considering the 90-day investment horizon Walmart is expected to generate 1.61 times more return on investment than Fidelity Dividend. However, Walmart is 1.61 times more volatile than Fidelity Dividend ETF. It trades about 0.42 of its potential returns per unit of risk. Fidelity Dividend ETF is currently generating about -0.12 per unit of risk. If you would invest  8,389  in Walmart on September 19, 2024 and sell it today you would earn a total of  966.00  from holding Walmart or generate 11.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Walmart  vs.  Fidelity Dividend ETF

Walmart

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 21 (%) 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 Dividend ETF

Risk-Adjusted Performance

2 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Dividend ETF are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Fidelity Dividend is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Walmart and Fidelity Dividend

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

The idea behind Walmart and Fidelity Dividend ETF 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.