Correlation Between United Parcel and CH Robinson

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

By analyzing existing cross correlation between United Parcel Service and CH Robinson Worldwide, you can compare the effects of market volatilities on United Parcel and CH Robinson 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 United Parcel with a short position of CH Robinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Parcel and CH Robinson.

Diversification Opportunities for United Parcel and CH Robinson

0.51

Correlation Coefficient

United Parcel  CH Robinson

Very weak diversification

The 3 months correlation between United and CH1A is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service and CH Robinson Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CH Robinson Worldwide and United Parcel 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 United Parcel Service are associated (or correlated) with CH Robinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CH Robinson Worldwide has no effect on the direction of United Parcel i.e., United Parcel and CH Robinson go up and down completely randomly.

Pair Corralation between United Parcel and CH Robinson

Assuming the 90 days trading horizon United Parcel Service is expected to under-perform the CH Robinson. But the stock apears to be less risky and, when comparing its historical volatility, United Parcel Service is 1.63 times less risky than CH Robinson. The stock trades about -0.17 of its potential returns per unit of risk. The CH Robinson Worldwide is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  10,237  in CH Robinson Worldwide on September 23, 2024 and sell it today you would lose (137.00) from holding CH Robinson Worldwide or give up 1.34% of portfolio value over 90 days.

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

United Parcel Service  vs.  CH Robinson Worldwide

United Parcel Service

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United Parcel Service are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, United Parcel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CH Robinson Worldwide

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CH Robinson Worldwide are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CH Robinson may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with United Parcel and CH Robinson

The main advantage of trading using opposite United Parcel and CH Robinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parcel position performs unexpectedly, CH Robinson 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 CH Robinson will offset losses from the drop in CH Robinson's long position.

The idea behind United Parcel Service and CH Robinson Worldwide 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.