Correlation Between Walmart and Fidelity Advisor

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

By analyzing existing cross correlation between Walmart and Fidelity Advisor 529, you can compare the effects of market volatilities on Walmart and Fidelity Advisor 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 Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Fidelity Advisor.

Diversification Opportunities for Walmart and Fidelity Advisor

0.63

Correlation Coefficient

Walmart  Fidelity Advisor

Poor diversification

The 3 months correlation between Walmart and Fidelity is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Fidelity Advisor 529 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor 529 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 Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor 529 has no effect on the direction of Walmart i.e., Walmart and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Walmart and Fidelity Advisor

Considering the 90-day investment horizon Walmart is expected to generate 1.52 times more return on investment than Fidelity Advisor. However, Walmart is 1.52 times more volatile than Fidelity Advisor 529. It trades about -0.05 of its potential returns per unit of risk. Fidelity Advisor 529 is currently generating about -0.08 per unit of risk. If you would invest  9,032  in Walmart on December 29, 2024 and sell it today you would lose (517.00) from holding Walmart or give up 5.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Walmart  vs.  Fidelity Advisor 529

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 Advisor 529

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Advisor 529 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Fidelity Advisor 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 Advisor

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

The idea behind Walmart and Fidelity Advisor 529 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.