Correlation Between Walmart and Fidelity Advantage
Can any of the company-specific risk be diversified away by investing in both Walmart and Fidelity Advantage 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 Advantage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Fidelity Advantage Ether, you can compare the effects of market volatilities on Walmart and Fidelity Advantage 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 Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Fidelity Advantage.
Diversification Opportunities for Walmart and Fidelity Advantage
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walmart and Fidelity is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Fidelity Advantage Ether in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advantage Ether 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 Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advantage Ether has no effect on the direction of Walmart i.e., Walmart and Fidelity Advantage go up and down completely randomly.
Pair Corralation between Walmart and Fidelity Advantage
Considering the 90-day investment horizon Walmart is expected to generate 3.37 times less return on investment than Fidelity Advantage. But when comparing it to its historical volatility, Walmart is 4.92 times less risky than Fidelity Advantage. It trades about 0.41 of its potential returns per unit of risk. Fidelity Advantage Ether is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 2,473 in Fidelity Advantage Ether on August 26, 2024 and sell it today you would earn a total of 819.00 from holding Fidelity Advantage Ether or generate 33.12% 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 Advantage Ether
Performance |
| Timeline |
| Walmart |
| Fidelity Advantage Ether |
Walmart and Fidelity Advantage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Fidelity Advantage
The main advantage of trading using opposite Walmart and Fidelity Advantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Fidelity Advantage 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 Advantage will offset losses from the drop in Fidelity Advantage's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
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Check out your portfolio center.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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