Correlation Between United Parcel and BYD
Can any of the company-specific risk be diversified away by investing in both United Parcel and BYD 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 United Parcel and BYD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Parcel Service and BYD Co, you can compare the effects of market volatilities on United Parcel and BYD 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 United Parcel with a short position of BYD. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Parcel and BYD.
Diversification Opportunities for United Parcel and BYD
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and BYD is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service and BYD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Co and United Parcel 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 United Parcel Service are associated (or correlated) with BYD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD Co has no effect on the direction of United Parcel i.e., United Parcel and BYD go up and down completely randomly.
Pair Corralation between United Parcel and BYD
Assuming the 90 days trading horizon United Parcel Service is expected to under-perform the BYD. But the stock apears to be less risky and, when comparing its historical volatility, United Parcel Service is 9.58 times less risky than BYD. The stock trades about -0.02 of its potential returns per unit of risk. The BYD Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,505 in BYD Co on August 26, 2024 and sell it today you would earn a total of 55.00 from holding BYD Co or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
United Parcel Service vs. BYD Co
Performance |
| Timeline |
| United Parcel Service |
| BYD Co |
United Parcel and BYD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Parcel and BYD
The main advantage of trading using opposite United Parcel and BYD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parcel position performs unexpectedly, BYD 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 BYD will offset losses from the drop in BYD's long position.| United Parcel vs. Samsung Electronics Co | United Parcel vs. Samsung Electronics Co | United Parcel vs. Hyundai Motor | United Parcel vs. Toyota Motor Corp |
| BYD vs. Samsung Electronics Co | BYD vs. Samsung Electronics Co | BYD vs. Hyundai Motor | BYD 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |