Correlation Between FedEx and Telefonaktiebolaget
Can any of the company-specific risk be diversified away by investing in both FedEx and Telefonaktiebolaget 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 Telefonaktiebolaget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FedEx and Telefonaktiebolaget LM Ericsson, you can compare the effects of market volatilities on FedEx and Telefonaktiebolaget 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 Telefonaktiebolaget. Check out your portfolio center. Please also check ongoing floating volatility patterns of FedEx and Telefonaktiebolaget.
Diversification Opportunities for FedEx and Telefonaktiebolaget
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FedEx and Telefonaktiebolaget is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding FedEx and Telefonaktiebolaget LM Ericsso in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonaktiebolaget 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 Telefonaktiebolaget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonaktiebolaget has no effect on the direction of FedEx i.e., FedEx and Telefonaktiebolaget go up and down completely randomly.
Pair Corralation between FedEx and Telefonaktiebolaget
Assuming the 90 days trading horizon FedEx is expected to generate 1.06 times less return on investment than Telefonaktiebolaget. In addition to that, FedEx is 1.23 times more volatile than Telefonaktiebolaget LM Ericsson. It trades about 0.13 of its total potential returns per unit of risk. Telefonaktiebolaget LM Ericsson is currently generating about 0.16 per unit of volatility. If you would invest 1,639 in Telefonaktiebolaget LM Ericsson on September 3, 2024 and sell it today you would earn a total of 761.00 from holding Telefonaktiebolaget LM Ericsson or generate 46.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.43% |
| Values | Daily Returns |
FedEx vs. Telefonaktiebolaget LM Ericsso
Performance |
| Timeline |
| FedEx |
| Telefonaktiebolaget |
FedEx and Telefonaktiebolaget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FedEx and Telefonaktiebolaget
The main advantage of trading using opposite FedEx and Telefonaktiebolaget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FedEx position performs unexpectedly, Telefonaktiebolaget 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 Telefonaktiebolaget will offset losses from the drop in Telefonaktiebolaget's long position.| FedEx vs. United Parcel Service | FedEx vs. Sequoia Logstica e | FedEx vs. Energisa SA | FedEx vs. BTG Pactual Logstica |
| Telefonaktiebolaget vs. Telecomunicaes Brasileiras SA | Telefonaktiebolaget vs. Uber Technologies | Telefonaktiebolaget vs. Unity Software | Telefonaktiebolaget vs. Verizon Communications |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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