Correlation Between Ubisoft Entertainment and FedEx

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

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

Diversification Opportunities for Ubisoft Entertainment and FedEx

0.04

Correlation Coefficient

Ubisoft Entertainment  FedEx

Significant diversification

The 3 months correlation between Ubisoft and FedEx is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ubisoft Entertainment SA and FedEx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx and Ubisoft Entertainment 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 Ubisoft Entertainment SA 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 Ubisoft Entertainment i.e., Ubisoft Entertainment and FedEx go up and down completely randomly.

Pair Corralation between Ubisoft Entertainment and FedEx

Assuming the 90 days horizon Ubisoft Entertainment SA is expected to generate 2.58 times more return on investment than FedEx. However, Ubisoft Entertainment is 2.58 times more volatile than FedEx. It trades about 0.16 of its potential returns per unit of risk. FedEx is currently generating about 0.0 per unit of risk. If you would invest  1,186  in Ubisoft Entertainment SA on October 6, 2024 and sell it today you would earn a total of  115.00  from holding Ubisoft Entertainment SA or generate 9.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Ubisoft Entertainment SA  vs.  FedEx

Ubisoft Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ubisoft Entertainment SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ubisoft Entertainment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

FedEx

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FedEx are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FedEx reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ubisoft Entertainment and FedEx

The main advantage of trading using opposite Ubisoft Entertainment and FedEx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ubisoft Entertainment 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 Ubisoft Entertainment SA 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..