Correlation Between Walmart and FS Energy

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

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

Diversification Opportunities for Walmart and FS Energy

-0.39

Correlation Coefficient

Walmart  FS Energy

Very good diversification

The 3 months correlation between Walmart and FSEN is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and FS Energy and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS Energy 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 FS Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Energy has no effect on the direction of Walmart i.e., Walmart and FS Energy go up and down completely randomly.

Pair Corralation between Walmart and FS Energy

Considering the 90-day investment horizon Walmart is expected to under-perform the FS Energy. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 5.28 times less risky than FS Energy. The stock trades about -0.01 of its potential returns per unit of risk. The FS Energy and is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,319  in FS Energy and on May 4, 2025 and sell it today you would earn a total of  81.00  from holding FS Energy and or generate 6.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Walmart  vs.  FS Energy and

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

FS Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FS Energy and are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very sluggish technical and fundamental indicators, FS Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and FS Energy

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

The idea behind Walmart and FS Energy and 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.