Correlation Between FedEx and DSV Panalpina

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

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

Diversification Opportunities for FedEx and DSV Panalpina

0.32

Correlation Coefficient

FedEx  DSV Panalpina

Weak diversification

The 3 months correlation between FedEx and DSV is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding FedEx and DSV Panalpina AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSV Panalpina AS 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 DSV Panalpina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSV Panalpina AS has no effect on the direction of FedEx i.e., FedEx and DSV Panalpina go up and down completely randomly.

Pair Corralation between FedEx and DSV Panalpina

Assuming the 90 days horizon FedEx is expected to under-perform the DSV Panalpina. In addition to that, FedEx is 1.29 times more volatile than DSV Panalpina AS. It trades about -0.13 of its total potential returns per unit of risk. DSV Panalpina AS is currently generating about -0.02 per unit of volatility. If you would invest  20,140  in DSV Panalpina AS on September 23, 2024 and sell it today you would lose (180.00) from holding DSV Panalpina AS or give up 0.89% of portfolio value over 90 days.

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

FedEx  vs.  DSV Panalpina AS

FedEx

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FedEx are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FedEx reported solid returns over the last few months and may actually be approaching a breakup point.

DSV Panalpina AS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DSV Panalpina AS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DSV Panalpina may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with FedEx and DSV Panalpina

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

The idea behind FedEx and DSV Panalpina AS 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.

Check out your portfolio center.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.