Correlation Between Royal Mail and Kuehne Nagel
Can any of the company-specific risk be diversified away by investing in both Royal Mail and Kuehne Nagel 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 Kuehne Nagel 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 Kuehne Nagel International, you can compare the effects of market volatilities on Royal Mail and Kuehne Nagel 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 Kuehne Nagel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Mail and Kuehne Nagel.
Diversification Opportunities for Royal Mail and Kuehne Nagel
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Royal and Kuehne is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Royal Mail PLC and Kuehne Nagel International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuehne Nagel Interna 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 Kuehne Nagel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuehne Nagel Interna has no effect on the direction of Royal Mail i.e., Royal Mail and Kuehne Nagel go up and down completely randomly.
Pair Corralation between Royal Mail and Kuehne Nagel
Assuming the 90 days horizon Royal Mail PLC is expected to generate 0.24 times more return on investment than Kuehne Nagel. However, Royal Mail PLC is 4.08 times less risky than Kuehne Nagel. It trades about -0.26 of its potential returns per unit of risk. Kuehne Nagel International is currently generating about -0.31 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Mail PLC vs. Kuehne Nagel International
Performance |
| Timeline |
| Royal Mail PLC |
| Kuehne Nagel Interna |
Royal Mail and Kuehne Nagel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Mail and Kuehne Nagel
The main advantage of trading using opposite Royal Mail and Kuehne Nagel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Mail position performs unexpectedly, Kuehne Nagel 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 Kuehne Nagel will offset losses from the drop in Kuehne Nagel's long position.| Royal Mail vs. Kuehne Nagel International | Royal Mail vs. United Parcel Service | Royal Mail vs. FedEx | Royal Mail vs. GXO Logistics |
| Kuehne Nagel vs. Kuehne Nagel International | Kuehne Nagel vs. United Parcel Service | Kuehne Nagel vs. FedEx | Kuehne Nagel 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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