Correlation Between DATA MODUL and FedEx

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

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

Diversification Opportunities for DATA MODUL and FedEx

-0.14

Correlation Coefficient

DATA MODUL  FedEx

Good diversification

The 3 months correlation between DATA and FedEx is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding DATA MODUL and FedEx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx and DATA MODUL 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 DATA MODUL 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 has no effect on the direction of DATA MODUL i.e., DATA MODUL and FedEx go up and down completely randomly.

Pair Corralation between DATA MODUL and FedEx

Assuming the 90 days trading horizon DATA MODUL is expected to under-perform the FedEx. In addition to that, DATA MODUL is 2.5 times more volatile than FedEx. It trades about -0.07 of its total potential returns per unit of risk. FedEx is currently generating about -0.05 per unit of volatility. If you would invest  26,635  in FedEx on October 25, 2024 and sell it today you would lose (235.00) from holding FedEx or give up 0.88% of portfolio value over 90 days.

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

DATA MODUL   vs.  FedEx

DATA MODUL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DATA MODUL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

FedEx

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FedEx are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, FedEx may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with DATA MODUL and FedEx

The main advantage of trading using opposite DATA MODUL and FedEx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATA MODUL 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 DATA MODUL and FedEx 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.