Correlation Between Sapiens International and FEDEX

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

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

Diversification Opportunities for Sapiens International and FEDEX

0.06

Correlation Coefficient

Sapiens International  FEDEX

Significant diversification

The 3 months correlation between Sapiens and FEDEX is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sapiens International 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 Sapiens 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 Sapiens International 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 Sapiens International i.e., Sapiens International and FEDEX go up and down completely randomly.

Pair Corralation between Sapiens International and FEDEX

Given the investment horizon of 90 days Sapiens International is expected to generate 1.79 times more return on investment than FEDEX. However, Sapiens International is 1.79 times more volatile than FEDEX P 42. It trades about -0.08 of its potential returns per unit of risk. FEDEX P 42 is currently generating about -0.2 per unit of risk. If you would invest  2,746  in Sapiens International on October 3, 2024 and sell it today you would lose (59.00) from holding Sapiens International or give up 2.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	86.36%
Values	Daily Returns

Sapiens International  vs.  FEDEX P 42

Sapiens International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sapiens International 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private 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 recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sapiens International and FEDEX

The main advantage of trading using opposite Sapiens International and FEDEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sapiens 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 Sapiens International 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.