Correlation Between Royal Mail and Expeditors International
Can any of the company-specific risk be diversified away by investing in both Royal Mail and Expeditors International 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 Expeditors International 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 Expeditors International of, you can compare the effects of market volatilities on Royal Mail and Expeditors International 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 Expeditors International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Mail and Expeditors International.
Diversification Opportunities for Royal Mail and Expeditors International
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Royal and Expeditors is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Royal Mail PLC and Expeditors International of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expeditors International 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 Expeditors International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expeditors International has no effect on the direction of Royal Mail i.e., Royal Mail and Expeditors International go up and down completely randomly.
Pair Corralation between Royal Mail and Expeditors International
Assuming the 90 days horizon Royal Mail PLC is expected to generate 1.94 times more return on investment than Expeditors International. However, Royal Mail is 1.94 times more volatile than Expeditors International of. It trades about 0.07 of its potential returns per unit of risk. Expeditors International of is currently generating about 0.01 per unit of risk. If you would invest 616.00 in Royal Mail PLC on August 24, 2024 and sell it today you would earn a total of 248.00 from holding Royal Mail PLC or generate 40.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Royal Mail PLC vs. Expeditors International of
Performance |
| Timeline |
| Royal Mail PLC |
| Expeditors International |
Royal Mail and Expeditors International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Mail and Expeditors International
The main advantage of trading using opposite Royal Mail and Expeditors International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Mail position performs unexpectedly, Expeditors International 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 Expeditors International will offset losses from the drop in Expeditors International's long position.| Royal Mail vs. Kuehne Nagel International | Royal Mail vs. Kuehne Nagel International | Royal Mail vs. DSV Panalpina AS | Royal Mail vs. DSV Panalpina AS |
| Expeditors International vs. Landstar System | Expeditors International vs. JB Hunt Transport | Expeditors International vs. Hub Group | Expeditors International vs. Forward Air |
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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