Correlation Between Walmart and Fidelity Low

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

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

Diversification Opportunities for Walmart and Fidelity Low

-0.08

Correlation Coefficient

Walmart  Fidelity Low

Good diversification

The 3 months correlation between Walmart and Fidelity is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Fidelity Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Low Duration 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 Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Low Duration has no effect on the direction of Walmart i.e., Walmart and Fidelity Low go up and down completely randomly.

Pair Corralation between Walmart and Fidelity Low

Considering the 90-day investment horizon Walmart is expected to under-perform the Fidelity Low. In addition to that, Walmart is 22.72 times more volatile than Fidelity Low Duration. It trades about -0.04 of its total potential returns per unit of risk. Fidelity Low Duration is currently generating about 0.26 per unit of volatility. If you would invest  4,997  in Fidelity Low Duration on December 28, 2024 and sell it today you would earn a total of  62.00  from holding Fidelity Low Duration or generate 1.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Walmart  vs.  Fidelity Low Duration

Walmart

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walmart has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Fidelity Low Duration

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Low Duration are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Fidelity Low is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walmart and Fidelity Low

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

The idea behind Walmart and Fidelity Low Duration 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.