Correlation Between US Bancorp and FedEx
Can any of the company-specific risk be diversified away by investing in both US Bancorp and FedEx 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 US Bancorp and FedEx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Bancorp and FedEx, you can compare the effects of market volatilities on US Bancorp and FedEx 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 US Bancorp with a short position of FedEx. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and FedEx.
Diversification Opportunities for US Bancorp and FedEx
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between USB and FedEx is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and FedEx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx and US Bancorp 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 US Bancorp are associated (or correlated) with FedEx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FedEx has no effect on the direction of US Bancorp i.e., US Bancorp and FedEx go up and down completely randomly.
Pair Corralation between US Bancorp and FedEx
Assuming the 90 days trading horizon US Bancorp is expected to generate 0.53 times more return on investment than FedEx. However, US Bancorp is 1.9 times less risky than FedEx. It trades about 0.22 of its potential returns per unit of risk. FedEx is currently generating about -0.12 per unit of risk. If you would invest 101,550 in US Bancorp on September 19, 2024 and sell it today you would earn a total of 3,394 from holding US Bancorp or generate 3.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
US Bancorp vs. FedEx
Performance |
| Timeline |
| US Bancorp |
| FedEx |
US Bancorp and FedEx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Bancorp and FedEx
The main advantage of trading using opposite US Bancorp and FedEx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp position performs unexpectedly, FedEx 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 FedEx will offset losses from the drop in FedEx's long position.| US Bancorp vs. Netflix | US Bancorp vs. Honeywell International | US Bancorp vs. The Goodyear Tire | US Bancorp vs. The Walt Disney |
| FedEx vs. Honeywell International | FedEx vs. The Walt Disney | FedEx vs. Netflix | FedEx vs. The Goodyear Tire |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |