Correlation Between S-E BANKEN and United Parcel
Can any of the company-specific risk be diversified away by investing in both S-E BANKEN 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 S-E BANKEN and United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between S E BANKEN A and United Parcel Service, you can compare the effects of market volatilities on S-E BANKEN 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 S-E BANKEN with a short position of United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of S-E BANKEN and United Parcel.
Diversification Opportunities for S-E BANKEN and United Parcel
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between S-E and United is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding S E BANKEN A 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 S-E BANKEN 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 S E BANKEN A 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 S-E BANKEN i.e., S-E BANKEN and United Parcel go up and down completely randomly.
Pair Corralation between S-E BANKEN and United Parcel
Assuming the 90 days trading horizon S E BANKEN A is expected to generate 1.51 times more return on investment than United Parcel. However, S-E BANKEN is 1.51 times more volatile than United Parcel Service. It trades about 0.16 of its potential returns per unit of risk. United Parcel Service is currently generating about -0.04 per unit of risk. If you would invest 952.00 in S E BANKEN A on January 24, 2024 and sell it today you would earn a total of 294.00 from holding S E BANKEN A or generate 30.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
S E BANKEN A vs. United Parcel Service
Performance |
| Timeline |
| S E BANKEN |
| United Parcel Service |
S-E BANKEN and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S-E BANKEN and United Parcel
The main advantage of trading using opposite S-E BANKEN and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S-E BANKEN 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.| S-E BANKEN vs. MeVis Medical Solutions | S-E BANKEN vs. SK TELECOM TDADR | S-E BANKEN vs. DXC Technology Co | S-E BANKEN vs. Ribbon Communications |
| United Parcel vs. JB Hunt Transport | United Parcel vs. Aquagold International | United Parcel vs. Thrivent High Yield | United Parcel vs. Morningstar Unconstrained Allocation |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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