Correlation Between FedEx and WSDMTR ERNGS
Can any of the company-specific risk be diversified away by investing in both FedEx and WSDMTR ERNGS 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 WSDMTR ERNGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FedEx and WSDMTR ERNGS 500, you can compare the effects of market volatilities on FedEx and WSDMTR ERNGS 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 WSDMTR ERNGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of FedEx and WSDMTR ERNGS.
Diversification Opportunities for FedEx and WSDMTR ERNGS
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FedEx and WSDMTR is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding FedEx and WSDMTR ERNGS 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WSDMTR ERNGS 500 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 WSDMTR ERNGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WSDMTR ERNGS 500 has no effect on the direction of FedEx i.e., FedEx and WSDMTR ERNGS go up and down completely randomly.
Pair Corralation between FedEx and WSDMTR ERNGS
Assuming the 90 days trading horizon FedEx is expected to generate 1.06 times less return on investment than WSDMTR ERNGS. In addition to that, FedEx is 2.1 times more volatile than WSDMTR ERNGS 500. It trades about 0.08 of its total potential returns per unit of risk. WSDMTR ERNGS 500 is currently generating about 0.18 per unit of volatility. If you would invest 4,900 in WSDMTR ERNGS 500 on September 19, 2024 and sell it today you would earn a total of 1,412 from holding WSDMTR ERNGS 500 or generate 28.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
FedEx vs. WSDMTR ERNGS 500
Performance |
| Timeline |
| FedEx |
| WSDMTR ERNGS 500 |
FedEx and WSDMTR ERNGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FedEx and WSDMTR ERNGS
The main advantage of trading using opposite FedEx and WSDMTR ERNGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FedEx position performs unexpectedly, WSDMTR ERNGS 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 WSDMTR ERNGS will offset losses from the drop in WSDMTR ERNGS's long position.| FedEx vs. Honeywell International | FedEx vs. The Walt Disney | FedEx vs. Netflix | FedEx vs. The Goodyear Tire |
| WSDMTR ERNGS vs. Vanguard Index Funds | WSDMTR ERNGS vs. Vanguard Index Funds | WSDMTR ERNGS vs. SPDR SP 500 | WSDMTR ERNGS vs. Vanguard Bond Index |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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