Correlation Between FedEx and Bollor SE

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

By analyzing existing cross correlation between FedEx and Bollor SE, you can compare the effects of market volatilities on FedEx and Bollor SE 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 Bollor SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of FedEx and Bollor SE.

Diversification Opportunities for FedEx and Bollor SE

-0.27

Correlation Coefficient

FedEx  Bollor SE

Very good diversification

The 3 months correlation between FedEx and Bollor is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding FedEx and Bollor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bollor SE 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 Bollor SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bollor SE has no effect on the direction of FedEx i.e., FedEx and Bollor SE go up and down completely randomly.

Pair Corralation between FedEx and Bollor SE

Assuming the 90 days horizon FedEx is expected to generate 1.53 times more return on investment than Bollor SE. However, FedEx is 1.53 times more volatile than Bollor SE. It trades about 0.14 of its potential returns per unit of risk. Bollor SE is currently generating about -0.02 per unit of risk. If you would invest  23,566  in FedEx on October 5, 2024 and sell it today you would earn a total of  3,629  from holding FedEx or generate 15.4% return on investment over 90 days.

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

FedEx  vs.  Bollor SE

FedEx

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FedEx are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, FedEx reported solid returns over the last few months and may actually be approaching a breakup point.

Bollor SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bollor SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Bollor SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FedEx and Bollor SE

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

The idea behind FedEx and Bollor SE 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.