Correlation Between United Parcel and International Business
Can any of the company-specific risk be diversified away by investing in both United Parcel and International Business 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 International Business 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 International Business Machines, you can compare the effects of market volatilities on United Parcel and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Parcel and International Business.
Diversification Opportunities for United Parcel and International Business
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and International is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of United Parcel i.e., United Parcel and International Business go up and down completely randomly.
Pair Corralation between United Parcel and International Business
Considering the 90-day investment horizon United Parcel Service is expected to generate 0.7 times more return on investment than International Business. However, United Parcel Service is 1.42 times less risky than International Business. It trades about 0.01 of its potential returns per unit of risk. International Business Machines is currently generating about -0.28 per unit of risk. If you would invest 14,733 in United Parcel Service on January 27, 2024 and sell it today you would earn a total of 6.00 from holding United Parcel Service or generate 0.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Parcel Service vs. International Business Machine
Performance |
| Timeline |
| United Parcel Service |
| International Business |
United Parcel and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Parcel and International Business
The main advantage of trading using opposite United Parcel and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parcel position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| United Parcel vs. JB Hunt Transport | United Parcel vs. Aquagold International | United Parcel vs. Thrivent High Yield | United Parcel vs. Morningstar Unconstrained Allocation |
| International Business vs. FiscalNote Holdings | International Business vs. Innodata | International Business vs. Aurora Innovation | International Business vs. Conduent |
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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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