Correlation Between FedEx and FedEx

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

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

Diversification Opportunities for FedEx and FedEx

0.88

Correlation Coefficient

FedEx  FedEx

Very poor diversification

The 3 months correlation between FedEx and FedEx is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding FedEx and FedEx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx 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. 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 FedEx i.e., FedEx and FedEx go up and down completely randomly.

Pair Corralation between FedEx and FedEx

Assuming the 90 days trading horizon FedEx is expected to under-perform the FedEx. In addition to that, FedEx is 1.34 times more volatile than FedEx. It trades about -0.13 of its total potential returns per unit of risk. FedEx is currently generating about -0.16 per unit of volatility. If you would invest  25,742  in FedEx on December 23, 2024 and sell it today you would lose (5,032) from holding FedEx or give up 19.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	83.61%
Values	Daily Returns

FedEx  vs.  FedEx

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. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with FedEx and FedEx

The main advantage of trading using opposite FedEx and FedEx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FedEx 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 FedEx 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.