Correlation Between Target Corp and United Parcel
Can any of the company-specific risk be diversified away by investing in both Target Corp 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 Target Corp and United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target Corp and United Parcel Service, you can compare the effects of market volatilities on Target Corp 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 Target Corp with a short position of United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target Corp and United Parcel.
Diversification Opportunities for Target Corp and United Parcel
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Target and United is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Target Corp 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 Target Corp 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 Target Corp 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 Target Corp i.e., Target Corp and United Parcel go up and down completely randomly.
Pair Corralation between Target Corp and United Parcel
Assuming the 90 days trading horizon Target Corp is expected to generate 1.53 times more return on investment than United Parcel. However, Target Corp is 1.53 times more volatile than United Parcel Service. It trades about -0.01 of its potential returns per unit of risk. United Parcel Service is currently generating about -0.02 per unit of risk. If you would invest 15,608 in Target Corp on August 30, 2024 and sell it today you would lose (2,578) from holding Target Corp or give up 16.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.49% |
| Values | Daily Returns |
Target Corp vs. United Parcel Service
Performance |
| Timeline |
| Target Corp |
| United Parcel Service |
Target Corp and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target Corp and United Parcel
The main advantage of trading using opposite Target Corp and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target Corp 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.| Target Corp vs. Leroy Seafood Group | Target Corp vs. Axfood AB | Target Corp vs. BW Offshore | Target Corp vs. Delta Air Lines |
| United Parcel vs. Charter Communications Cl | United Parcel vs. Worldwide Healthcare Trust | United Parcel vs. Target Healthcare REIT | United Parcel vs. Primary Health Properties |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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