Correlation Between Expeditors International and United Parcel

Can any of the company-specific risk be diversified away by investing in both Expeditors International 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 Expeditors International and United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Expeditors International of and United Parcel Service, you can compare the effects of market volatilities on Expeditors International 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 Expeditors International with a short position of United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expeditors International and United Parcel.

Diversification Opportunities for Expeditors International and United Parcel

-0.15

Correlation Coefficient

Expeditors International  United Parcel

Good diversification

The 3 months correlation between Expeditors and United is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Expeditors International of 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 Expeditors International 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 Expeditors International of 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 Expeditors International i.e., Expeditors International and United Parcel go up and down completely randomly.

Pair Corralation between Expeditors International and United Parcel

Given the investment horizon of 90 days Expeditors International of is expected to generate 0.75 times more return on investment than United Parcel. However, Expeditors International of is 1.33 times less risky than United Parcel. It trades about -0.01 of its potential returns per unit of risk. United Parcel Service is currently generating about -0.13 per unit of risk. If you would invest  11,111  in Expeditors International of on January 6, 2025 and sell it today you would lose (213.00) from holding Expeditors International of or give up 1.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Expeditors International of  vs.  United Parcel Service

Expeditors International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Expeditors International of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Expeditors International is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

United Parcel Service

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Parcel Service has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Expeditors International and United Parcel

The main advantage of trading using opposite Expeditors International and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expeditors International 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.

The idea behind Expeditors International of and United Parcel Service pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.