Correlation Between FedEx and Air T

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

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

Diversification Opportunities for FedEx and Air T

-0.22

Correlation Coefficient

FedEx  Air T

Very good diversification

The 3 months correlation between FedEx and Air is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding FedEx and Air T Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air T Inc 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 Air T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air T Inc has no effect on the direction of FedEx i.e., FedEx and Air T go up and down completely randomly.

Pair Corralation between FedEx and Air T

Considering the 90-day investment horizon FedEx is expected to generate 0.81 times more return on investment than Air T. However, FedEx is 1.23 times less risky than Air T. It trades about 0.05 of its potential returns per unit of risk. Air T Inc is currently generating about 0.0 per unit of risk. If you would invest  19,049  in FedEx on December 2, 2024 and sell it today you would earn a total of  7,241  from holding FedEx or generate 38.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.68%
Values	Daily Returns

FedEx  vs.  Air T Inc

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 latest unfluctuating performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Air T Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Air T Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Air T is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with FedEx and Air T

The main advantage of trading using opposite FedEx and Air T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FedEx position performs unexpectedly, Air T 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 Air T will offset losses from the drop in Air T's long position.

The idea behind FedEx and Air T Inc 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.