Correlation Between FedEx and Rockwell Automation

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

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

Diversification Opportunities for FedEx and Rockwell Automation

0.48

Correlation Coefficient

FedEx  Rockwell Automation

Very weak diversification

The 3 months correlation between FedEx and Rockwell is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding FedEx and Rockwell Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockwell Automation 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 Rockwell Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockwell Automation has no effect on the direction of FedEx i.e., FedEx and Rockwell Automation go up and down completely randomly.

Pair Corralation between FedEx and Rockwell Automation

Considering the 90-day investment horizon FedEx is expected to under-perform the Rockwell Automation. In addition to that, FedEx is 1.02 times more volatile than Rockwell Automation. It trades about -0.03 of its total potential returns per unit of risk. Rockwell Automation is currently generating about 0.04 per unit of volatility. If you would invest  26,965  in Rockwell Automation on October 26, 2024 and sell it today you would earn a total of  2,039  from holding Rockwell Automation or generate 7.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.19%
Values	Daily Returns

FedEx  vs.  Rockwell Automation

FedEx

Risk-Adjusted Performance

0 of 100

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 fairly strong fundamental indicators, FedEx is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Rockwell Automation

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with FedEx and Rockwell Automation

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

The idea behind FedEx and Rockwell Automation 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.