Correlation Between UPS CDR and Equitable
Can any of the company-specific risk be diversified away by investing in both UPS CDR and Equitable 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 UPS CDR and Equitable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UPS CDR and Equitable Group, you can compare the effects of market volatilities on UPS CDR and Equitable 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 UPS CDR with a short position of Equitable. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPS CDR and Equitable.
Diversification Opportunities for UPS CDR and Equitable
Poor diversification
The 3 months correlation between UPS and Equitable is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding UPS CDR and Equitable Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable Group and UPS CDR 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 UPS CDR are associated (or correlated) with Equitable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Group has no effect on the direction of UPS CDR i.e., UPS CDR and Equitable go up and down completely randomly.
Pair Corralation between UPS CDR and Equitable
Assuming the 90 days trading horizon UPS CDR is expected to under-perform the Equitable. But the stock apears to be less risky and, when comparing its historical volatility, UPS CDR is 1.06 times less risky than Equitable. The stock trades about -0.03 of its potential returns per unit of risk. The Equitable Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,469 in Equitable Group on November 1, 2024 and sell it today you would earn a total of 4,491 from holding Equitable Group or generate 69.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
UPS CDR vs. Equitable Group
Performance |
| Timeline |
| UPS CDR |
| Equitable Group |
UPS CDR and Equitable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UPS CDR and Equitable
The main advantage of trading using opposite UPS CDR and Equitable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPS CDR position performs unexpectedly, Equitable 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 Equitable will offset losses from the drop in Equitable's long position.| UPS CDR vs. XXIX Metal Corp | UPS CDR vs. Sun Peak Metals | UPS CDR vs. Magna Mining | UPS CDR vs. Thunderbird Entertainment Group |
| Equitable vs. goeasy | Equitable vs. Canadian Western Bank | Equitable vs. TFI International | Equitable vs. Intact Financial |
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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