Correlation Between FEDEX and Morgan Advanced

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

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

Diversification Opportunities for FEDEX and Morgan Advanced

0.23

Correlation Coefficient

FEDEX  Morgan Advanced

Modest diversification

The 3 months correlation between FEDEX and Morgan is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding FEDEX P and Morgan Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Advanced Materials and FEDEX 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 FEDEX P are associated (or correlated) with Morgan Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Advanced Materials has no effect on the direction of FEDEX i.e., FEDEX and Morgan Advanced go up and down completely randomly.

Pair Corralation between FEDEX and Morgan Advanced

Assuming the 90 days trading horizon FEDEX P is expected to generate 0.71 times more return on investment than Morgan Advanced. However, FEDEX P is 1.41 times less risky than Morgan Advanced. It trades about -0.24 of its potential returns per unit of risk. Morgan Advanced Materials is currently generating about -0.23 per unit of risk. If you would invest  9,840  in FEDEX P on October 9, 2024 and sell it today you would lose (570.00) from holding FEDEX P or give up 5.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

FEDEX P  vs.  Morgan Advanced Materials

FEDEX P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FEDEX P 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.

Morgan Advanced Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morgan Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with FEDEX and Morgan Advanced

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

The idea behind FEDEX P and Morgan Advanced Materials 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.