Correlation Between Southern Copper and FedEx

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

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

Diversification Opportunities for Southern Copper and FedEx

0.02

Correlation Coefficient

Southern Copper  FedEx

Significant diversification

The 3 months correlation between Southern and FedEx is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and FedEx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx and Southern Copper 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 Southern Copper 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 Southern Copper i.e., Southern Copper and FedEx go up and down completely randomly.

Pair Corralation between Southern Copper and FedEx

Assuming the 90 days trading horizon Southern Copper is expected to generate 0.51 times more return on investment than FedEx. However, Southern Copper is 1.96 times less risky than FedEx. It trades about -0.07 of its potential returns per unit of risk. FedEx is currently generating about -0.13 per unit of risk. If you would invest  207,258  in Southern Copper on November 28, 2024 and sell it today you would lose (9,448) from holding Southern Copper or give up 4.56% of portfolio value over 90 days.

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

Southern Copper  vs.  FedEx

Southern Copper

Risk-Adjusted Performance

Very Weak

Over the last 90 days Southern Copper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Southern Copper is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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. In spite of weak performance in the last few months, the Stock's basic 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 Southern Copper and FedEx

The main advantage of trading using opposite Southern Copper and FedEx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper 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 Southern Copper 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.