Correlation Between Visa and FedEx
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and FedEx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and FedEx, you can compare the effects of market volatilities on Visa 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 Visa with a short position of FedEx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and FedEx.
Diversification Opportunities for Visa and FedEx
Poor diversification
The 3 months correlation between Visa and FedEx is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and FedEx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx and Visa 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 Visa Class A 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 Visa i.e., Visa and FedEx go up and down completely randomly.
Pair Corralation between Visa and FedEx
Taking into account the 90-day investment horizon Visa is expected to generate 1.55 times less return on investment than FedEx. But when comparing it to its historical volatility, Visa Class A is 1.93 times less risky than FedEx. It trades about 0.09 of its potential returns per unit of risk. FedEx is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 15,573 in FedEx on August 30, 2024 and sell it today you would earn a total of 13,212 from holding FedEx or generate 84.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.21% |
| Values | Daily Returns |
Visa Class A vs. FedEx
Performance |
| Timeline |
| Visa Class A |
| FedEx |
Visa and FedEx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and FedEx
The main advantage of trading using opposite Visa and FedEx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| FedEx vs. DICKS Sporting Goods | FedEx vs. SPORTING | FedEx vs. Ming Le Sports | FedEx vs. Air Transport Services |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |