Correlation Between Compass Group and United Parcel
Can any of the company-specific risk be diversified away by investing in both Compass Group 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 Compass Group and United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass Group PLC and United Parcel Service, you can compare the effects of market volatilities on Compass Group 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 Compass Group with a short position of United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Group and United Parcel.
Diversification Opportunities for Compass Group and United Parcel
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Compass and United is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Compass Group PLC 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 Compass Group 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 Compass Group PLC 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 Compass Group i.e., Compass Group and United Parcel go up and down completely randomly.
Pair Corralation between Compass Group and United Parcel
Assuming the 90 days trading horizon Compass Group PLC is expected to generate 0.31 times more return on investment than United Parcel. However, Compass Group PLC is 3.19 times less risky than United Parcel. It trades about 0.19 of its potential returns per unit of risk. United Parcel Service is currently generating about -0.09 per unit of risk. If you would invest 264,671 in Compass Group PLC on November 2, 2024 and sell it today you would earn a total of 11,529 from holding Compass Group PLC or generate 4.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Compass Group PLC vs. United Parcel Service
Performance |
| Timeline |
| Compass Group PLC |
| United Parcel Service |
Compass Group and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Group and United Parcel
The main advantage of trading using opposite Compass Group and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Group 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.| Compass Group vs. Public Storage | Compass Group vs. Supermarket Income REIT | Compass Group vs. MoneysupermarketCom Group PLC | Compass Group vs. Premier Foods PLC |
| United Parcel vs. Alaska Air Group | United Parcel vs. Pfeiffer Vacuum Technology | United Parcel vs. Auction Technology Group | United Parcel vs. Alfa Financial Software |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |