Correlation Between FedEx and DOLFINES
Can any of the company-specific risk be diversified away by investing in both FedEx and DOLFINES 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 DOLFINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FedEx and DOLFINES SA EO, you can compare the effects of market volatilities on FedEx and DOLFINES 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 DOLFINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of FedEx and DOLFINES.
Diversification Opportunities for FedEx and DOLFINES
Poor diversification
The 3 months correlation between FedEx and DOLFINES is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding FedEx and DOLFINES SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOLFINES SA EO 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 DOLFINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOLFINES SA EO has no effect on the direction of FedEx i.e., FedEx and DOLFINES go up and down completely randomly.
Pair Corralation between FedEx and DOLFINES
Assuming the 90 days horizon FedEx is expected to generate 66.15 times less return on investment than DOLFINES. But when comparing it to its historical volatility, FedEx is 31.75 times less risky than DOLFINES. It trades about 0.08 of its potential returns per unit of risk. DOLFINES SA EO is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 50.00 in DOLFINES SA EO on October 17, 2024 and sell it today you would earn a total of 123.00 from holding DOLFINES SA EO or generate 246.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.53% |
| Values | Daily Returns |
FedEx vs. DOLFINES SA EO
Performance |
| Timeline |
| FedEx |
| DOLFINES SA EO |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
FedEx and DOLFINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FedEx and DOLFINES
The main advantage of trading using opposite FedEx and DOLFINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FedEx position performs unexpectedly, DOLFINES 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 DOLFINES will offset losses from the drop in DOLFINES's long position.| FedEx vs. Molson Coors Beverage | FedEx vs. KENEDIX OFFICE INV | FedEx vs. GEAR4MUSIC LS 10 | FedEx vs. UNIVERSAL MUSIC GROUP |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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