Correlation Between DSV Panalpina and FedEx
Can any of the company-specific risk be diversified away by investing in both DSV Panalpina 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 DSV Panalpina and FedEx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DSV Panalpina AS and FedEx, you can compare the effects of market volatilities on DSV Panalpina 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 DSV Panalpina with a short position of FedEx. Check out your portfolio center. Please also check ongoing floating volatility patterns of DSV Panalpina and FedEx.
Diversification Opportunities for DSV Panalpina and FedEx
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between DSV and FedEx is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding DSV Panalpina AS and FedEx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx and DSV Panalpina 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 DSV Panalpina AS 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 DSV Panalpina i.e., DSV Panalpina and FedEx go up and down completely randomly.
Pair Corralation between DSV Panalpina and FedEx
Assuming the 90 days trading horizon DSV Panalpina is expected to generate 29.48 times less return on investment than FedEx. But when comparing it to its historical volatility, DSV Panalpina AS is 1.37 times less risky than FedEx. It trades about 0.01 of its potential returns per unit of risk. FedEx is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 25,250 in FedEx on September 4, 2024 and sell it today you would earn a total of 3,610 from holding FedEx or generate 14.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DSV Panalpina AS vs. FedEx
Performance |
| Timeline |
| DSV Panalpina AS |
| FedEx |
DSV Panalpina and FedEx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DSV Panalpina and FedEx
The main advantage of trading using opposite DSV Panalpina and FedEx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DSV Panalpina 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.| DSV Panalpina vs. Sanyo Chemical Industries | DSV Panalpina vs. ScanSource | DSV Panalpina vs. TAL Education Group | DSV Panalpina vs. TIANDE CHEMICAL |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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