Correlation Between Walmart and Fidelity Info

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Can any of the company-specific risk be diversified away by investing in both Walmart and Fidelity Info 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 Info into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Fidelity Info Tech, you can compare the effects of market volatilities on Walmart and Fidelity Info 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 Info. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Fidelity Info.

Diversification Opportunities for Walmart and Fidelity Info

0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Walmart and Fidelity is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Fidelity Info Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Info Tech 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 Info. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Info Tech has no effect on the direction of Walmart i.e., Walmart and Fidelity Info go up and down completely randomly.

Pair Corralation between Walmart and Fidelity Info

Considering the 90-day investment horizon Walmart is expected to generate 0.84 times more return on investment than Fidelity Info. However, Walmart is 1.19 times less risky than Fidelity Info. It trades about -0.01 of its potential returns per unit of risk. Fidelity Info Tech is currently generating about -0.04 per unit of risk. If you would invest  13,719  in Walmart on June 27, 2022 and sell it today you would lose (713.00)  from holding Walmart or give up 5.2% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.6%
ValuesDaily Returns

Walmart  vs.  Fidelity Info Tech

 Performance (%) 
       Timeline  
Walmart 
Walmart Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Walmart Price Channel

Fidelity Info Tech 
Fidelity Performance
0 of 100
Over the last 90 days Fidelity Info Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Fidelity Info is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Price Channel

Walmart and Fidelity Info Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walmart and Fidelity Info

The main advantage of trading using opposite Walmart and Fidelity Info positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Fidelity Info 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 Info will offset losses from the drop in Fidelity Info's long position.
Walmart vs. BUSHVELD MINERALS LTD
The idea behind Walmart and Fidelity Info Tech 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.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Fidelity Info as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Fidelity Info's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Fidelity Info's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Fidelity Info Tech.
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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