Correlation Between United Parcel and Hub
Can any of the company-specific risk be diversified away by investing in both United Parcel and Hub 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 Hub 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 Hub Group, you can compare the effects of market volatilities on United Parcel and Hub 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 Hub. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Parcel and Hub.
Diversification Opportunities for United Parcel and Hub
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and Hub is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service and Hub Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hub Group 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 Hub. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hub Group has no effect on the direction of United Parcel i.e., United Parcel and Hub go up and down completely randomly.
Pair Corralation between United Parcel and Hub
Considering the 90-day investment horizon United Parcel is expected to generate 18.12 times less return on investment than Hub. But when comparing it to its historical volatility, United Parcel Service is 1.85 times less risky than Hub. It trades about 0.04 of its potential returns per unit of risk. Hub Group is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 4,369 in Hub Group on August 28, 2024 and sell it today you would earn a total of 951.00 from holding Hub Group or generate 21.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Parcel Service vs. Hub Group
Performance |
| Timeline |
| United Parcel Service |
| Hub Group |
United Parcel and Hub Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Parcel and Hub
The main advantage of trading using opposite United Parcel and Hub positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parcel position performs unexpectedly, Hub 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 Hub will offset losses from the drop in Hub's long position.| United Parcel vs. Aquagold International | United Parcel vs. Morningstar Unconstrained Allocation | United Parcel vs. Thrivent High Yield | United Parcel vs. Via Renewables |
| Hub vs. Aquagold International | Hub vs. Morningstar Unconstrained Allocation | Hub vs. Thrivent High Yield | Hub vs. Via Renewables |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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