Correlation Between FedEx and United Parcel
Can any of the company-specific risk be diversified away by investing in both FedEx and United Parcel 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 United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FedEx and United Parcel Service, you can compare the effects of market volatilities on FedEx and United Parcel 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 United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of FedEx and United Parcel.
Diversification Opportunities for FedEx and United Parcel
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FedEx and United is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding FedEx and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service 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 United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of FedEx i.e., FedEx and United Parcel go up and down completely randomly.
Pair Corralation between FedEx and United Parcel
Assuming the 90 days horizon FedEx is expected to generate 1.41 times less return on investment than United Parcel. In addition to that, FedEx is 1.72 times more volatile than United Parcel Service. It trades about 0.03 of its total potential returns per unit of risk. United Parcel Service is currently generating about 0.08 per unit of volatility. If you would invest 11,506 in United Parcel Service on September 12, 2024 and sell it today you would earn a total of 802.00 from holding United Parcel Service or generate 6.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FedEx vs. United Parcel Service
Performance |
| Timeline |
| FedEx |
| United Parcel Service |
FedEx and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FedEx and United Parcel
The main advantage of trading using opposite FedEx and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FedEx position performs unexpectedly, United Parcel 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 United Parcel will offset losses from the drop in United Parcel's long position.| FedEx vs. Bollor SE | FedEx vs. Superior Plus Corp | FedEx vs. Origin Agritech | FedEx vs. INTUITIVE SURGICAL |
| United Parcel vs. SOLSTAD OFFSHORE NK | United Parcel vs. FEMALE HEALTH | United Parcel vs. SIEM OFFSHORE NEW | United Parcel vs. Natural Health Trends |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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