Correlation Between FedEx and Securitas
Can any of the company-specific risk be diversified away by investing in both FedEx and Securitas 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 Securitas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FedEx and Securitas AB, you can compare the effects of market volatilities on FedEx and Securitas 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 Securitas. Check out your portfolio center. Please also check ongoing floating volatility patterns of FedEx and Securitas.
Diversification Opportunities for FedEx and Securitas
Poor diversification
The 3 months correlation between FedEx and Securitas is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding FedEx and Securitas AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Securitas AB 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 Securitas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Securitas AB has no effect on the direction of FedEx i.e., FedEx and Securitas go up and down completely randomly.
Pair Corralation between FedEx and Securitas
Assuming the 90 days horizon FedEx is expected to generate 1.77 times more return on investment than Securitas. However, FedEx is 1.77 times more volatile than Securitas AB. It trades about -0.02 of its potential returns per unit of risk. Securitas AB is currently generating about -0.3 per unit of risk. If you would invest 26,975 in FedEx on October 16, 2024 and sell it today you would lose (150.00) from holding FedEx or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.12% |
| Values | Daily Returns |
FedEx vs. Securitas AB
Performance |
| Timeline |
| FedEx |
| Securitas AB |
FedEx and Securitas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FedEx and Securitas
The main advantage of trading using opposite FedEx and Securitas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FedEx position performs unexpectedly, Securitas 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 Securitas will offset losses from the drop in Securitas' long position.| FedEx vs. Take Two Interactive Software | FedEx vs. China Reinsurance | FedEx vs. SCOTT TECHNOLOGY | FedEx vs. Sunny Optical Technology |
| Securitas vs. ASSA ABLOY AB | Securitas vs. Halma plc | Securitas vs. Allegion plc | Securitas vs. Superior Plus 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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