Correlation Between FedEx and Pitney Bowes

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

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

Diversification Opportunities for FedEx and Pitney Bowes

0.81

Correlation Coefficient

FedEx  Pitney Bowes

Very poor diversification

The 3 months correlation between FedEx and Pitney is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding FedEx and Pitney Bowes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pitney Bowes 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 Pitney Bowes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pitney Bowes has no effect on the direction of FedEx i.e., FedEx and Pitney Bowes go up and down completely randomly.

Pair Corralation between FedEx and Pitney Bowes

Considering the 90-day investment horizon FedEx is expected to generate 4.58 times less return on investment than Pitney Bowes. But when comparing it to its historical volatility, FedEx is 1.74 times less risky than Pitney Bowes. It trades about 0.03 of its potential returns per unit of risk. Pitney Bowes is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  410.00  in Pitney Bowes on October 6, 2024 and sell it today you would earn a total of  323.00  from holding Pitney Bowes or generate 78.78% return on investment over 90 days.

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

FedEx  vs.  Pitney Bowes

FedEx

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FedEx are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, FedEx may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pitney Bowes

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pitney Bowes are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental drivers, Pitney Bowes may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FedEx and Pitney Bowes

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

The idea behind FedEx and Pitney Bowes 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.