Correlation Between Hub and Royal Mail
Can any of the company-specific risk be diversified away by investing in both Hub and Royal Mail 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 Hub and Royal Mail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hub Group and Royal Mail Plc, you can compare the effects of market volatilities on Hub and Royal Mail 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 Hub with a short position of Royal Mail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hub and Royal Mail.
Diversification Opportunities for Hub and Royal Mail
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hub and Royal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hub Group and Royal Mail Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Mail Plc and Hub 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 Hub Group are associated (or correlated) with Royal Mail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Mail Plc has no effect on the direction of Hub i.e., Hub and Royal Mail go up and down completely randomly.
Pair Corralation between Hub and Royal Mail
Given the investment horizon of 90 days Hub Group is expected to under-perform the Royal Mail. But the stock apears to be less risky and, when comparing its historical volatility, Hub Group is 1.83 times less risky than Royal Mail. The stock trades about 0.0 of its potential returns per unit of risk. The Royal Mail Plc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 279.00 in Royal Mail Plc on November 5, 2024 and sell it today you would earn a total of 105.00 from holding Royal Mail Plc or generate 37.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 36.64% |
| Values | Daily Returns |
Hub Group vs. Royal Mail Plc
Performance |
| Timeline |
| Hub Group |
| Royal Mail Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Hub and Royal Mail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hub and Royal Mail
The main advantage of trading using opposite Hub and Royal Mail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hub position performs unexpectedly, Royal Mail 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 Royal Mail will offset losses from the drop in Royal Mail's long position.| Hub vs. Landstar System | Hub vs. JB Hunt Transport | Hub vs. Expeditors International of | Hub vs. CH Robinson Worldwide |
| Royal Mail vs. Freightos Limited Ordinary | Royal Mail vs. Addentax Group Corp | Royal Mail vs. United Parcel Service | Royal Mail vs. GXO Logistics |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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