Correlation Between Scholastic and FEDEX

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

By analyzing existing cross correlation between Scholastic and FEDEX P 42, you can compare the effects of market volatilities on Scholastic 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 Scholastic with a short position of FEDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scholastic and FEDEX.

Diversification Opportunities for Scholastic and FEDEX

0.1

Correlation Coefficient

Scholastic  FEDEX

Average diversification

The 3 months correlation between Scholastic and FEDEX is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Scholastic and FEDEX P 42 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEDEX P 42 and Scholastic 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 Scholastic 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 P 42 has no effect on the direction of Scholastic i.e., Scholastic and FEDEX go up and down completely randomly.

Pair Corralation between Scholastic and FEDEX

Given the investment horizon of 90 days Scholastic is expected to generate 2.76 times less return on investment than FEDEX. In addition to that, Scholastic is 3.39 times more volatile than FEDEX P 42. It trades about 0.01 of its total potential returns per unit of risk. FEDEX P 42 is currently generating about 0.1 per unit of volatility. If you would invest  9,752  in FEDEX P 42 on October 22, 2024 and sell it today you would earn a total of  147.00  from holding FEDEX P 42 or generate 1.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Scholastic  vs.  FEDEX P 42

Scholastic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scholastic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

FEDEX P 42

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FEDEX P 42 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FEDEX is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Scholastic and FEDEX

The main advantage of trading using opposite Scholastic and FEDEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scholastic 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 Scholastic and FEDEX P 42 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.