Correlation Between International Business and United Parcel
Can any of the company-specific risk be diversified away by investing in both International Business and United Parcel 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 International Business and United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and United Parcel Service, you can compare the effects of market volatilities on International Business and United Parcel 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 International Business with a short position of United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and United Parcel.
Diversification Opportunities for International Business and United Parcel
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between International and United is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service and International Business 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 International Business Machines are associated (or correlated) with United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of International Business i.e., International Business and United Parcel go up and down completely randomly.
Pair Corralation between International Business and United Parcel
Considering the 90-day investment horizon International Business Machines is expected to generate 0.73 times more return on investment than United Parcel. However, International Business Machines is 1.37 times less risky than United Parcel. It trades about 0.15 of its potential returns per unit of risk. United Parcel Service is currently generating about -0.06 per unit of risk. If you would invest 11,984 in International Business Machines on January 19, 2024 and sell it today you would earn a total of 6,326 from holding International Business Machines or generate 52.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. United Parcel Service
Performance |
| Timeline |
| International Business |
| United Parcel Service |
International Business and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and United Parcel
The main advantage of trading using opposite International Business and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, United Parcel 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 United Parcel will offset losses from the drop in United Parcel's long position.| International Business vs. Pfizer Inc | International Business vs. Home Federal Bancorp | International Business vs. Betterware De Mexico | International Business vs. Heartland Financial USA |
| United Parcel vs. GXO Logistics | United Parcel vs. JB Hunt Transport | United Parcel vs. Expeditors International of | United Parcel vs. CH Robinson Worldwide |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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