Correlation Between Deutsche Post and United Parcel
Can any of the company-specific risk be diversified away by investing in both Deutsche Post and United Parcel 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 Deutsche Post and United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Post AG and United Parcel Service, you can compare the effects of market volatilities on Deutsche Post and United Parcel 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 Deutsche Post with a short position of United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Post and United Parcel.
Diversification Opportunities for Deutsche Post and United Parcel
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Deutsche and United is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Post AG and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service and Deutsche Post 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 Deutsche Post AG are associated (or correlated) with United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of Deutsche Post i.e., Deutsche Post and United Parcel go up and down completely randomly.
Pair Corralation between Deutsche Post and United Parcel
Assuming the 90 days trading horizon Deutsche Post is expected to generate 1.61 times less return on investment than United Parcel. But when comparing it to its historical volatility, Deutsche Post AG is 1.2 times less risky than United Parcel. It trades about 0.01 of its potential returns per unit of risk. United Parcel Service is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 13,238 in United Parcel Service on August 26, 2024 and sell it today you would earn a total of 170.00 from holding United Parcel Service or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.9% |
| Values | Daily Returns |
Deutsche Post AG vs. United Parcel Service
Performance |
| Timeline |
| Deutsche Post AG |
| United Parcel Service |
Deutsche Post and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Post and United Parcel
The main advantage of trading using opposite Deutsche Post and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Post position performs unexpectedly, United Parcel 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 United Parcel will offset losses from the drop in United Parcel's long position.| Deutsche Post vs. Samsung Electronics Co | Deutsche Post vs. Samsung Electronics Co | Deutsche Post vs. Hyundai Motor | Deutsche Post vs. Toyota Motor Corp |
| United Parcel vs. Samsung Electronics Co | United Parcel vs. Samsung Electronics Co | United Parcel vs. Hyundai Motor | United Parcel vs. Toyota Motor Corp |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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