Correlation Between Easy Software and FedEx Corp

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

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

Diversification Opportunities for Easy Software and FedEx Corp

0.16

Correlation Coefficient

Easy Software  FedEx Corp

Average diversification

The 3 months correlation between Easy and FedEx is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Easy Software AG and FedEx Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx Corp and Easy Software 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 Easy Software AG are associated (or correlated) with FedEx Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FedEx Corp has no effect on the direction of Easy Software i.e., Easy Software and FedEx Corp go up and down completely randomly.

Pair Corralation between Easy Software and FedEx Corp

Assuming the 90 days trading horizon Easy Software is expected to generate 1.11 times less return on investment than FedEx Corp. In addition to that, Easy Software is 1.29 times more volatile than FedEx Corp. It trades about 0.03 of its total potential returns per unit of risk. FedEx Corp is currently generating about 0.04 per unit of volatility. If you would invest  19,012  in FedEx Corp on October 8, 2024 and sell it today you would earn a total of  7,498  from holding FedEx Corp or generate 39.44% return on investment over 90 days.

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

Easy Software AG  vs.  FedEx Corp

Easy Software AG

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Easy Software AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Easy Software displayed solid returns over the last few months and may actually be approaching a breakup point.

FedEx Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FedEx Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, FedEx Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Easy Software and FedEx Corp

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

The idea behind Easy Software AG and FedEx Corp 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.