Correlation Between United Parcel and Sequoia Logstica

Can any of the company-specific risk be diversified away by investing in both United Parcel and Sequoia Logstica 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 Sequoia Logstica 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 Sequoia Logstica e, you can compare the effects of market volatilities on United Parcel and Sequoia Logstica 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 Sequoia Logstica. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Parcel and Sequoia Logstica.

Diversification Opportunities for United Parcel and Sequoia Logstica

0.61

Correlation Coefficient

United Parcel  Sequoia Logstica

Poor diversification

The 3 months correlation between United and Sequoia is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service and Sequoia Logstica e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sequoia Logstica e 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 Sequoia Logstica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sequoia Logstica e has no effect on the direction of United Parcel i.e., United Parcel and Sequoia Logstica go up and down completely randomly.

Pair Corralation between United Parcel and Sequoia Logstica

Assuming the 90 days trading horizon United Parcel Service is expected to under-perform the Sequoia Logstica. But the stock apears to be less risky and, when comparing its historical volatility, United Parcel Service is 1.63 times less risky than Sequoia Logstica. The stock trades about -0.12 of its potential returns per unit of risk. The Sequoia Logstica e is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  240.00  in Sequoia Logstica e on December 26, 2024 and sell it today you would lose (35.00) from holding Sequoia Logstica e or give up 14.58% of portfolio value over 90 days.

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

United Parcel Service  vs.  Sequoia Logstica e

United Parcel Service

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Parcel Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sequoia Logstica e

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sequoia Logstica e has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with United Parcel and Sequoia Logstica

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

The idea behind United Parcel Service and Sequoia Logstica e 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .