Correlation Between Royal Mail and Deutsche Post
Can any of the company-specific risk be diversified away by investing in both Royal Mail and Deutsche Post 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 Royal Mail and Deutsche Post into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Mail PLC and Deutsche Post AG, you can compare the effects of market volatilities on Royal Mail and Deutsche Post 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 Royal Mail with a short position of Deutsche Post. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Mail and Deutsche Post.
Diversification Opportunities for Royal Mail and Deutsche Post
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Royal and Deutsche is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Royal Mail PLC and Deutsche Post AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Post AG and Royal Mail 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 Royal Mail PLC are associated (or correlated) with Deutsche Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Post AG has no effect on the direction of Royal Mail i.e., Royal Mail and Deutsche Post go up and down completely randomly.
Pair Corralation between Royal Mail and Deutsche Post
Assuming the 90 days horizon Royal Mail PLC is expected to generate 0.11 times more return on investment than Deutsche Post. However, Royal Mail PLC is 8.84 times less risky than Deutsche Post. It trades about -0.26 of its potential returns per unit of risk. Deutsche Post AG is currently generating about -0.19 per unit of risk. If you would invest 878.00 in Royal Mail PLC on August 28, 2024 and sell it today you would lose (14.00) from holding Royal Mail PLC or give up 1.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Mail PLC vs. Deutsche Post AG
Performance |
| Timeline |
| Royal Mail PLC |
| Deutsche Post AG |
Royal Mail and Deutsche Post Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Mail and Deutsche Post
The main advantage of trading using opposite Royal Mail and Deutsche Post positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Mail position performs unexpectedly, Deutsche Post 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 Deutsche Post will offset losses from the drop in Deutsche Post's long position.| Royal Mail vs. Kuehne Nagel International | Royal Mail vs. United Parcel Service | Royal Mail vs. FedEx | Royal Mail vs. GXO Logistics |
| Deutsche Post vs. Kuehne Nagel International | Deutsche Post vs. United Parcel Service | Deutsche Post vs. FedEx | Deutsche Post 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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