Correlation Between Bright Scholar and FEDEX

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

By analyzing existing cross correlation between Bright Scholar Education and FEDEX P 42, you can compare the effects of market volatilities on Bright Scholar and FEDEX 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 Bright Scholar with a short position of FEDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Scholar and FEDEX.

Diversification Opportunities for Bright Scholar and FEDEX

0.11

Correlation Coefficient

Bright Scholar  FEDEX

Average diversification

The 3 months correlation between Bright and FEDEX is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and FEDEX P 42 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEDEX P 42 and Bright Scholar 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 Bright Scholar Education are associated (or correlated) with FEDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEDEX P 42 has no effect on the direction of Bright Scholar i.e., Bright Scholar and FEDEX go up and down completely randomly.

Pair Corralation between Bright Scholar and FEDEX

Given the investment horizon of 90 days Bright Scholar Education is expected to generate 8.67 times more return on investment than FEDEX. However, Bright Scholar is 8.67 times more volatile than FEDEX P 42. It trades about 0.15 of its potential returns per unit of risk. FEDEX P 42 is currently generating about 0.1 per unit of risk. If you would invest  143.00  in Bright Scholar Education on October 22, 2024 and sell it today you would earn a total of  26.00  from holding Bright Scholar Education or generate 18.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Bright Scholar Education  vs.  FEDEX P 42

Bright Scholar Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bright Scholar Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Bright Scholar is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

FEDEX P 42

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FEDEX P 42 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FEDEX is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bright Scholar and FEDEX

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

The idea behind Bright Scholar Education and FEDEX P 42 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.