Correlation Between IShares Trust and FedEx
Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 IShares Trust and FedEx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and FedEx, you can compare the effects of market volatilities on IShares Trust 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 IShares Trust with a short position of FedEx. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and FedEx.
Diversification Opportunities for IShares Trust and FedEx
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and FedEx is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and FedEx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx and IShares Trust 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 iShares Trust 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 IShares Trust i.e., IShares Trust and FedEx go up and down completely randomly.
Pair Corralation between IShares Trust and FedEx
Assuming the 90 days trading horizon IShares Trust is expected to generate 1.69 times less return on investment than FedEx. But when comparing it to its historical volatility, iShares Trust is 1.36 times less risky than FedEx. It trades about 0.1 of its potential returns per unit of risk. FedEx is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 435,228 in FedEx on September 1, 2024 and sell it today you would earn a total of 181,722 from holding FedEx or generate 41.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. FedEx
Performance |
| Timeline |
| iShares Trust |
| FedEx |
IShares Trust and FedEx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and FedEx
The main advantage of trading using opposite IShares Trust and FedEx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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.| IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust |
| FedEx vs. Genworth Financial | FedEx vs. Grupo Sports World | FedEx vs. Capital One Financial | FedEx vs. Monster Beverage Corp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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