Correlation Between FedEx and FedEx Corp

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

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

Diversification Opportunities for FedEx and FedEx Corp

0.99

Correlation Coefficient

FedEx  FedEx Corp

No risk reduction

The 3 months correlation between FedEx and FedEx is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding FedEx and FedEx Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx Corp 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 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 FedEx i.e., FedEx and FedEx Corp go up and down completely randomly.

Pair Corralation between FedEx and FedEx Corp

Assuming the 90 days horizon FedEx is expected to under-perform the FedEx Corp. But the stock apears to be less risky and, when comparing its historical volatility, FedEx is 1.07 times less risky than FedEx Corp. The stock trades about -0.11 of its potential returns per unit of risk. The FedEx Corp is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  25,474  in FedEx Corp on December 21, 2024 and sell it today you would lose (2,564) from holding FedEx Corp or give up 10.07% of portfolio value over 90 days.

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

FedEx  vs.  FedEx Corp

FedEx

Risk-Adjusted Performance

Very Weak

Over the last 90 days FedEx has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

FedEx Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days FedEx Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with FedEx and FedEx Corp

The main advantage of trading using opposite FedEx and FedEx Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FedEx 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 FedEx 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .