Correlation Between FedEx and Biogen
Can any of the company-specific risk be diversified away by investing in both FedEx and Biogen 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 Biogen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FedEx and Biogen Inc, you can compare the effects of market volatilities on FedEx and Biogen 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 Biogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of FedEx and Biogen.
Diversification Opportunities for FedEx and Biogen
Very good diversification
The 3 months correlation between FedEx and Biogen is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding FedEx and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen Inc 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 Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of FedEx i.e., FedEx and Biogen go up and down completely randomly.
Pair Corralation between FedEx and Biogen
Assuming the 90 days trading horizon FedEx is expected to generate 1.27 times more return on investment than Biogen. However, FedEx is 1.27 times more volatile than Biogen Inc. It trades about 0.12 of its potential returns per unit of risk. Biogen Inc is currently generating about -0.04 per unit of risk. 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 |
FedEx vs. Biogen Inc
Performance |
| Timeline |
| FedEx |
| Biogen Inc |
FedEx and Biogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FedEx and Biogen
The main advantage of trading using opposite FedEx and Biogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FedEx position performs unexpectedly, Biogen 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 Biogen will offset losses from the drop in Biogen's long position.| FedEx vs. Genworth Financial | FedEx vs. Grupo Sports World | FedEx vs. Capital One Financial | FedEx vs. Monster Beverage Corp |
| Biogen vs. Verizon Communications | Biogen vs. FIBRA Storage | Biogen vs. New Oriental Education | Biogen vs. Prudential Financial |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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