Correlation Between FedEx and Select Sector
Can any of the company-specific risk be diversified away by investing in both FedEx and Select Sector 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 Select Sector into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FedEx and The Select Sector, you can compare the effects of market volatilities on FedEx and Select Sector 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 Select Sector. Check out your portfolio center. Please also check ongoing floating volatility patterns of FedEx and Select Sector.
Diversification Opportunities for FedEx and Select Sector
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FedEx and Select is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding FedEx and The Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Sector 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 Select Sector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Sector has no effect on the direction of FedEx i.e., FedEx and Select Sector go up and down completely randomly.
Pair Corralation between FedEx and Select Sector
Assuming the 90 days trading horizon FedEx is expected to generate 1.17 times more return on investment than Select Sector. However, FedEx is 1.17 times more volatile than The Select Sector. It trades about 0.12 of its potential returns per unit of risk. The Select Sector is currently generating about 0.13 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FedEx vs. The Select Sector
Performance |
| Timeline |
| FedEx |
| Select Sector |
FedEx and Select Sector Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FedEx and Select Sector
The main advantage of trading using opposite FedEx and Select Sector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FedEx position performs unexpectedly, Select Sector 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 Select Sector will offset losses from the drop in Select Sector's long position.| FedEx vs. Genworth Financial | FedEx vs. Grupo Sports World | FedEx vs. Capital One Financial | FedEx vs. Monster Beverage Corp |
| Select Sector vs. The Select Sector | Select Sector vs. The Select Sector | Select Sector vs. The Select Sector | Select Sector vs. The Select Sector |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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