Correlation Between United Parcel and CH Robinson
Can any of the company-specific risk be diversified away by investing in both United Parcel and CH Robinson 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 CH Robinson 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 CH Robinson Worldwide, you can compare the effects of market volatilities on United Parcel and CH Robinson 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 CH Robinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Parcel and CH Robinson.
Diversification Opportunities for United Parcel and CH Robinson
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and CHRW is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service and CH Robinson Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CH Robinson Worldwide 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 CH Robinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CH Robinson Worldwide has no effect on the direction of United Parcel i.e., United Parcel and CH Robinson go up and down completely randomly.
Pair Corralation between United Parcel and CH Robinson
Considering the 90-day investment horizon United Parcel Service is expected to under-perform the CH Robinson. But the stock apears to be less risky and, when comparing its historical volatility, United Parcel Service is 1.07 times less risky than CH Robinson. The stock trades about -0.04 of its potential returns per unit of risk. The CH Robinson Worldwide is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 9,948 in CH Robinson Worldwide on November 5, 2024 and sell it today you would earn a total of 1.00 from holding CH Robinson Worldwide or generate 0.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Parcel Service vs. CH Robinson Worldwide
Performance |
| Timeline |
| United Parcel Service |
| CH Robinson Worldwide |
United Parcel and CH Robinson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Parcel and CH Robinson
The main advantage of trading using opposite United Parcel and CH Robinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parcel position performs unexpectedly, CH Robinson 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 CH Robinson will offset losses from the drop in CH Robinson's long position.| United Parcel vs. GXO Logistics | United Parcel vs. JB Hunt Transport | United Parcel vs. Expeditors International of | United Parcel vs. CH Robinson Worldwide |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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