Correlation Between PS International and FedEx

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

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

Diversification Opportunities for PS International and FedEx

0.27

Correlation Coefficient

PS International  FedEx

Modest diversification

The 3 months correlation between PSIG and FedEx is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding PS International Group and FedEx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx and PS International 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 PS International Group 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 PS International i.e., PS International and FedEx go up and down completely randomly.

Pair Corralation between PS International and FedEx

Given the investment horizon of 90 days PS International Group is expected to generate 4.2 times more return on investment than FedEx. However, PS International is 4.2 times more volatile than FedEx. It trades about 0.08 of its potential returns per unit of risk. FedEx is currently generating about -0.14 per unit of risk. If you would invest  49.00  in PS International Group on November 29, 2024 and sell it today you would earn a total of  2.98  from holding PS International Group or generate 6.08% return on investment over 90 days.

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

PS International Group  vs.  FedEx

PS International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PS International Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, PS International may actually be approaching a critical reversion point that can send shares even higher in March 2025.

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 unfluctuating performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with PS International and FedEx

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

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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.