Correlation Between FedEx and Forward Air
Can any of the company-specific risk be diversified away by investing in both FedEx and Forward Air 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 Forward Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FedEx and Forward Air, you can compare the effects of market volatilities on FedEx and Forward Air 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 Forward Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of FedEx and Forward Air.
Diversification Opportunities for FedEx and Forward Air
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FedEx and Forward is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding FedEx and Forward Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forward Air 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 Forward Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forward Air has no effect on the direction of FedEx i.e., FedEx and Forward Air go up and down completely randomly.
Pair Corralation between FedEx and Forward Air
Considering the 90-day investment horizon FedEx is expected to generate 0.35 times more return on investment than Forward Air. However, FedEx is 2.86 times less risky than Forward Air. It trades about 0.22 of its potential returns per unit of risk. Forward Air is currently generating about 0.03 per unit of risk. If you would invest 27,368 in FedEx on August 30, 2024 and sell it today you would earn a total of 2,971 from holding FedEx or generate 10.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FedEx vs. Forward Air
Performance |
| Timeline |
| FedEx |
| Forward Air |
FedEx and Forward Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FedEx and Forward Air
The main advantage of trading using opposite FedEx and Forward Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FedEx position performs unexpectedly, Forward Air 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 Forward Air will offset losses from the drop in Forward Air's long position.| FedEx vs. GXO Logistics | FedEx vs. JB Hunt Transport | FedEx vs. Expeditors International of | FedEx vs. CH Robinson Worldwide |
| Forward Air vs. Landstar System | Forward Air vs. JB Hunt Transport | Forward Air vs. Expeditors International of | Forward Air vs. CH Robinson Worldwide |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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