Correlation Between Hub and United Parcel
Can any of the company-specific risk be diversified away by investing in both Hub and United Parcel 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 United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hub Group and United Parcel Service, you can compare the effects of market volatilities on Hub and United Parcel 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 United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hub and United Parcel.
Diversification Opportunities for Hub and United Parcel
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hub and United is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Hub Group and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service 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 United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of Hub i.e., Hub and United Parcel go up and down completely randomly.
Pair Corralation between Hub and United Parcel
Given the investment horizon of 90 days Hub Group is expected to generate 1.85 times more return on investment than United Parcel. However, Hub is 1.85 times more volatile than United Parcel Service. It trades about 0.38 of its potential returns per unit of risk. United Parcel Service is currently generating about 0.04 per unit of risk. If you would invest 4,369 in Hub Group on August 28, 2024 and sell it today you would earn a total of 951.00 from holding Hub Group or generate 21.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hub Group vs. United Parcel Service
Performance |
| Timeline |
| Hub Group |
| United Parcel Service |
Hub and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hub and United Parcel
The main advantage of trading using opposite Hub and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hub position performs unexpectedly, United Parcel 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 United Parcel will offset losses from the drop in United Parcel's long position.| Hub vs. Aquagold International | Hub vs. Morningstar Unconstrained Allocation | Hub vs. Thrivent High Yield | Hub vs. Via Renewables |
| United Parcel vs. Aquagold International | United Parcel vs. Morningstar Unconstrained Allocation | United Parcel vs. Thrivent High Yield | United Parcel vs. Via Renewables |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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