Correlation Between Air Transport and FedEx
Can any of the company-specific risk be diversified away by investing in both Air Transport and FedEx 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 Air Transport and FedEx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Transport Services and FedEx, you can compare the effects of market volatilities on Air Transport and FedEx 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 Air Transport with a short position of FedEx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and FedEx.
Diversification Opportunities for Air Transport and FedEx
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and FedEx is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and FedEx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx and Air Transport 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 Air Transport Services are associated (or correlated) with FedEx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FedEx has no effect on the direction of Air Transport i.e., Air Transport and FedEx go up and down completely randomly.
Pair Corralation between Air Transport and FedEx
Assuming the 90 days horizon Air Transport Services is expected to generate 1.47 times more return on investment than FedEx. However, Air Transport is 1.47 times more volatile than FedEx. It trades about 0.13 of its potential returns per unit of risk. FedEx is currently generating about 0.08 per unit of risk. If you would invest 1,240 in Air Transport Services on September 1, 2024 and sell it today you would earn a total of 840.00 from holding Air Transport Services or generate 67.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.24% |
| Values | Daily Returns |
Air Transport Services vs. FedEx
Performance |
| Timeline |
| Air Transport Services |
| FedEx |
Air Transport and FedEx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and FedEx
The main advantage of trading using opposite Air Transport and FedEx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport position performs unexpectedly, FedEx 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 FedEx will offset losses from the drop in FedEx's long position.| Air Transport vs. Digilife Technologies Limited | Air Transport vs. COMBA TELECOM SYST | Air Transport vs. Singapore Telecommunications Limited | Air Transport vs. Chunghwa Telecom Co |
| FedEx vs. Performance Food Group | FedEx vs. Gol Intelligent Airlines | FedEx vs. LIFEWAY FOODS | FedEx vs. Tyson Foods |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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