Correlation Between FedEx and Carmat SA
Can any of the company-specific risk be diversified away by investing in both FedEx and Carmat SA 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 FedEx and Carmat SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FedEx and Carmat SA, you can compare the effects of market volatilities on FedEx and Carmat SA 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 FedEx with a short position of Carmat SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of FedEx and Carmat SA.
Diversification Opportunities for FedEx and Carmat SA
Excellent diversification
The 3 months correlation between FedEx and Carmat is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding FedEx and Carmat SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmat SA and FedEx 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 FedEx are associated (or correlated) with Carmat SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmat SA has no effect on the direction of FedEx i.e., FedEx and Carmat SA go up and down completely randomly.
Pair Corralation between FedEx and Carmat SA
Assuming the 90 days horizon FedEx is expected to generate 0.44 times more return on investment than Carmat SA. However, FedEx is 2.28 times less risky than Carmat SA. It trades about 0.04 of its potential returns per unit of risk. Carmat SA is currently generating about -0.09 per unit of risk. If you would invest 22,595 in FedEx on October 20, 2024 and sell it today you would earn a total of 4,300 from holding FedEx or generate 19.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FedEx vs. Carmat SA
Performance |
| Timeline |
| FedEx |
| Carmat SA |
FedEx and Carmat SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FedEx and Carmat SA
The main advantage of trading using opposite FedEx and Carmat SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FedEx position performs unexpectedly, Carmat SA 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 Carmat SA will offset losses from the drop in Carmat SA's long position.| FedEx vs. United Parcel Service | FedEx vs. Deutsche Post AG | FedEx vs. DSV Panalpina AS | FedEx vs. ZTO Express |
| Carmat SA vs. Media and Games | Carmat SA vs. DETALION GAMES SA | Carmat SA vs. MTY Food Group | Carmat SA vs. SENECA FOODS A |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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