Correlation Between United Parcel and Grupo Sports
Can any of the company-specific risk be diversified away by investing in both United Parcel and Grupo Sports 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 United Parcel and Grupo Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Parcel Service and Grupo Sports World, you can compare the effects of market volatilities on United Parcel and Grupo Sports 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 United Parcel with a short position of Grupo Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Parcel and Grupo Sports.
Diversification Opportunities for United Parcel and Grupo Sports
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and Grupo is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service and Grupo Sports World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Sports World and United Parcel 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 United Parcel Service are associated (or correlated) with Grupo Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Sports World has no effect on the direction of United Parcel i.e., United Parcel and Grupo Sports go up and down completely randomly.
Pair Corralation between United Parcel and Grupo Sports
Assuming the 90 days trading horizon United Parcel Service is expected to generate 0.84 times more return on investment than Grupo Sports. However, United Parcel Service is 1.19 times less risky than Grupo Sports. It trades about 0.16 of its potential returns per unit of risk. Grupo Sports World is currently generating about 0.06 per unit of risk. If you would invest 263,507 in United Parcel Service on September 4, 2024 and sell it today you would earn a total of 10,093 from holding United Parcel Service or generate 3.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Parcel Service vs. Grupo Sports World
Performance |
| Timeline |
| United Parcel Service |
| Grupo Sports World |
United Parcel and Grupo Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Parcel and Grupo Sports
The main advantage of trading using opposite United Parcel and Grupo Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parcel position performs unexpectedly, Grupo Sports 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 Grupo Sports will offset losses from the drop in Grupo Sports' long position.| United Parcel vs. Grupo Sports World | United Parcel vs. Hoteles City Express | United Parcel vs. Monster Beverage Corp | United Parcel vs. Grupo Hotelero Santa |
| Grupo Sports vs. McEwen Mining | Grupo Sports vs. Costco Wholesale | Grupo Sports vs. Hoteles City Express | Grupo Sports vs. GMxico Transportes SAB |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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