Correlation Between UPS CDR and North American
Can any of the company-specific risk be diversified away by investing in both UPS CDR and North American 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 North American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UPS CDR and North American Financial, you can compare the effects of market volatilities on UPS CDR and North American 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 North American. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPS CDR and North American.
Diversification Opportunities for UPS CDR and North American
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UPS and North is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding UPS CDR and North American Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Financial 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 North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Financial has no effect on the direction of UPS CDR i.e., UPS CDR and North American go up and down completely randomly.
Pair Corralation between UPS CDR and North American
Assuming the 90 days trading horizon UPS CDR is expected to generate 10.31 times less return on investment than North American. But when comparing it to its historical volatility, UPS CDR is 1.35 times less risky than North American. It trades about 0.04 of its potential returns per unit of risk. North American Financial is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 685.00 in North American Financial on August 29, 2024 and sell it today you would earn a total of 75.00 from holding North American Financial or generate 10.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UPS CDR vs. North American Financial
Performance |
| Timeline |
| UPS CDR |
| North American Financial |
UPS CDR and North American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UPS CDR and North American
The main advantage of trading using opposite UPS CDR and North American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPS CDR position performs unexpectedly, North American 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 North American will offset losses from the drop in North American's long position.| UPS CDR vs. Laurentian Bank | UPS CDR vs. Bank of Nova | UPS CDR vs. Northstar Clean Technologies | UPS CDR vs. Tree Island Steel |
| North American vs. Dividend Growth Split | North American vs. Dividend 15 Split | North American vs. Financial 15 Split | North American vs. Dividend 15 Split |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |