Correlation Between United Parcel and Cable One
Can any of the company-specific risk be diversified away by investing in both United Parcel and Cable One 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 Cable One 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 Cable One, you can compare the effects of market volatilities on United Parcel and Cable One 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 Cable One. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Parcel and Cable One.
Diversification Opportunities for United Parcel and Cable One
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Cable is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One 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 Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of United Parcel i.e., United Parcel and Cable One go up and down completely randomly.
Pair Corralation between United Parcel and Cable One
Assuming the 90 days trading horizon United Parcel Service is expected to generate 0.61 times more return on investment than Cable One. However, United Parcel Service is 1.63 times less risky than Cable One. It trades about 0.03 of its potential returns per unit of risk. Cable One is currently generating about 0.01 per unit of risk. If you would invest 4,653 in United Parcel Service on September 4, 2024 and sell it today you would earn a total of 412.00 from holding United Parcel Service or generate 8.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 71.19% |
| Values | Daily Returns |
United Parcel Service vs. Cable One
Performance |
| Timeline |
| United Parcel Service |
| Cable One |
United Parcel and Cable One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Parcel and Cable One
The main advantage of trading using opposite United Parcel and Cable One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parcel position performs unexpectedly, Cable One 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 Cable One will offset losses from the drop in Cable One's long position.| United Parcel vs. FedEx | United Parcel vs. Sequoia Logstica e | United Parcel vs. Energisa SA | United Parcel vs. BTG Pactual Logstica |
| Cable One vs. Capital One Financial | Cable One vs. Bank of America | Cable One vs. Prudential Financial | Cable One vs. Monster Beverage |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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