Correlation Between Deutsche Post and FedEx
Can any of the company-specific risk be diversified away by investing in both Deutsche Post 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 Deutsche Post and FedEx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Post AG and FedEx, you can compare the effects of market volatilities on Deutsche Post 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 Deutsche Post with a short position of FedEx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Post and FedEx.
Diversification Opportunities for Deutsche Post and FedEx
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Deutsche and FedEx is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Post AG and FedEx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx and Deutsche Post 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 Deutsche Post AG 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 Deutsche Post i.e., Deutsche Post and FedEx go up and down completely randomly.
Pair Corralation between Deutsche Post and FedEx
Assuming the 90 days trading horizon Deutsche Post AG is expected to under-perform the FedEx. But the stock apears to be less risky and, when comparing its historical volatility, Deutsche Post AG is 1.14 times less risky than FedEx. The stock trades about -0.02 of its potential returns per unit of risk. The FedEx is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 23,453 in FedEx on August 29, 2024 and sell it today you would earn a total of 5,332 from holding FedEx or generate 22.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Post AG vs. FedEx
Performance |
| Timeline |
| Deutsche Post AG |
| FedEx |
Deutsche Post and FedEx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Post and FedEx
The main advantage of trading using opposite Deutsche Post and FedEx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Post 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.| Deutsche Post vs. ZTO Express | Deutsche Post vs. Expeditors International of | Deutsche Post vs. Superior Plus Corp | Deutsche Post vs. Origin Agritech |
| FedEx vs. DICKS Sporting Goods | FedEx vs. SPORTING | FedEx vs. Ming Le Sports | FedEx vs. Air Transport Services |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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