Correlation Between Walmart and Fidelity Large
Can any of the company-specific risk be diversified away by investing in both Walmart and Fidelity Large 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 Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Fidelity Large Cap, you can compare the effects of market volatilities on Walmart and Fidelity Large 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 Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Fidelity Large.
Diversification Opportunities for Walmart and Fidelity Large
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and Fidelity is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Fidelity Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Large Cap 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 Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Large Cap has no effect on the direction of Walmart i.e., Walmart and Fidelity Large go up and down completely randomly.
Pair Corralation between Walmart and Fidelity Large
Considering the 90-day investment horizon Walmart is expected to generate 1.18 times more return on investment than Fidelity Large. However, Walmart is 1.18 times more volatile than Fidelity Large Cap. It trades about 0.13 of its potential returns per unit of risk. Fidelity Large Cap is currently generating about 0.1 per unit of risk. If you would invest 4,796 in Walmart on September 3, 2024 and sell it today you would earn a total of 4,454 from holding Walmart or generate 92.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 30.91% |
| Values | Daily Returns |
Walmart vs. Fidelity Large Cap
Performance |
| Timeline |
| Walmart |
| Fidelity Large Cap |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Walmart and Fidelity Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Fidelity Large
The main advantage of trading using opposite Walmart and Fidelity Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Fidelity Large 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 Large will offset losses from the drop in Fidelity Large's long position.| Walmart vs. Partner Communications | Walmart vs. Merck Company | Walmart vs. Western Midstream Partners | Walmart vs. Edgewise Therapeutics |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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