Correlation Between Walmart and Fidelity Value

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

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

Diversification Opportunities for Walmart and Fidelity Value

0.84

Correlation Coefficient

Walmart  Fidelity Value

Very poor diversification

The 3 months correlation between Walmart and Fidelity is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Fidelity Value Factor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Value Factor 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 Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Value Factor has no effect on the direction of Walmart i.e., Walmart and Fidelity Value go up and down completely randomly.

Pair Corralation between Walmart and Fidelity Value

Considering the 90-day investment horizon Walmart is expected to generate 1.33 times more return on investment than Fidelity Value. However, Walmart is 1.33 times more volatile than Fidelity Value Factor. It trades about 0.14 of its potential returns per unit of risk. Fidelity Value Factor is currently generating about 0.1 per unit of risk. If you would invest  4,600  in Walmart on September 20, 2024 and sell it today you would earn a total of  4,740  from holding Walmart or generate 103.04% return on investment over 90 days.

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

Walmart  vs.  Fidelity Value Factor

Walmart

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 20 (%) 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 Value Factor

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Value Factor are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Fidelity Value is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Walmart and Fidelity Value

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

The idea behind Walmart and Fidelity Value Factor 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.