Correlation Between FedEx and Transdigm Group

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

By analyzing existing cross correlation between FedEx and Transdigm Group Incorporated, you can compare the effects of market volatilities on FedEx and Transdigm Group 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 FedEx with a short position of Transdigm Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of FedEx and Transdigm Group.

Diversification Opportunities for FedEx and Transdigm Group

-0.31

Correlation Coefficient

FedEx  Transdigm Group

Very good diversification

The 3 months correlation between FedEx and Transdigm is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding FedEx and Transdigm Group Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transdigm Group and FedEx 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 FedEx are associated (or correlated) with Transdigm Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transdigm Group has no effect on the direction of FedEx i.e., FedEx and Transdigm Group go up and down completely randomly.

Pair Corralation between FedEx and Transdigm Group

Considering the 90-day investment horizon FedEx is expected to generate 0.78 times more return on investment than Transdigm Group. However, FedEx is 1.29 times less risky than Transdigm Group. It trades about 0.12 of its potential returns per unit of risk. Transdigm Group Incorporated is currently generating about -0.08 per unit of risk. If you would invest  22,243  in FedEx on July 30, 2025 and sell it today you would earn a total of  2,712  from holding FedEx or generate 12.19% return on investment over 90 days.

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

FedEx  vs.  Transdigm Group Incorporated

FedEx

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in FedEx are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, FedEx may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Transdigm Group

Risk-Adjusted Performance

Weakest

Over the last 90 days Transdigm Group Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with FedEx and Transdigm Group

The main advantage of trading using opposite FedEx and Transdigm Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FedEx position performs unexpectedly, Transdigm Group 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 Transdigm Group will offset losses from the drop in Transdigm Group's long position.

The idea behind FedEx and Transdigm Group Incorporated 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.