Correlation Between United Parcel and Caledonia Investments
Can any of the company-specific risk be diversified away by investing in both United Parcel and Caledonia Investments 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 Caledonia Investments 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 Caledonia Investments, you can compare the effects of market volatilities on United Parcel and Caledonia Investments 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 Caledonia Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Parcel and Caledonia Investments.
Diversification Opportunities for United Parcel and Caledonia Investments
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Caledonia is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service and Caledonia Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Investments 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 Caledonia Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Investments has no effect on the direction of United Parcel i.e., United Parcel and Caledonia Investments go up and down completely randomly.
Pair Corralation between United Parcel and Caledonia Investments
Assuming the 90 days trading horizon United Parcel Service is expected to generate 0.89 times more return on investment than Caledonia Investments. However, United Parcel Service is 1.13 times less risky than Caledonia Investments. It trades about 0.31 of its potential returns per unit of risk. Caledonia Investments is currently generating about 0.2 per unit of risk. If you would invest 12,621 in United Parcel Service on October 25, 2024 and sell it today you would earn a total of 679.00 from holding United Parcel Service or generate 5.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
United Parcel Service vs. Caledonia Investments
Performance |
| Timeline |
| United Parcel Service |
| Caledonia Investments |
United Parcel and Caledonia Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Parcel and Caledonia Investments
The main advantage of trading using opposite United Parcel and Caledonia Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parcel position performs unexpectedly, Caledonia Investments 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 Caledonia Investments will offset losses from the drop in Caledonia Investments' long position.| United Parcel vs. Adriatic Metals | United Parcel vs. Wizz Air Holdings | United Parcel vs. Fulcrum Metals PLC | United Parcel vs. URU Metals |
| Caledonia Investments vs. Eastinco Mining Exploration | Caledonia Investments vs. Associated British Foods | Caledonia Investments vs. Rheinmetall AG | Caledonia Investments vs. Jacquet Metal Service |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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