Correlation Between CH Robinson and United Parcel
Can any of the company-specific risk be diversified away by investing in both CH Robinson 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 CH Robinson and United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CH Robinson Worldwide and United Parcel Service, you can compare the effects of market volatilities on CH Robinson 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 CH Robinson with a short position of United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of CH Robinson and United Parcel.
Diversification Opportunities for CH Robinson and United Parcel
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHRW and United is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CH Robinson Worldwide 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 CH Robinson 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 CH Robinson Worldwide 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 CH Robinson i.e., CH Robinson and United Parcel go up and down completely randomly.
Pair Corralation between CH Robinson and United Parcel
Given the investment horizon of 90 days CH Robinson Worldwide is expected to under-perform the United Parcel. In addition to that, CH Robinson is 1.37 times more volatile than United Parcel Service. It trades about -0.03 of its total potential returns per unit of risk. United Parcel Service is currently generating about 0.11 per unit of volatility. If you would invest 13,369 in United Parcel Service on August 28, 2024 and sell it today you would earn a total of 385.00 from holding United Parcel Service or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CH Robinson Worldwide vs. United Parcel Service
Performance |
| Timeline |
| CH Robinson Worldwide |
| United Parcel Service |
CH Robinson and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CH Robinson and United Parcel
The main advantage of trading using opposite CH Robinson and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CH Robinson 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.| CH Robinson vs. JB Hunt Transport | CH Robinson vs. Landstar System | CH Robinson vs. Hub Group | CH Robinson vs. Forward Air |
| United Parcel vs. Expeditors International of | United Parcel vs. Aquagold International | United Parcel vs. Morningstar Unconstrained Allocation | United Parcel vs. Thrivent High Yield |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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