Correlation Between DSV Panalpina and FedEx

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

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

Diversification Opportunities for DSV Panalpina and FedEx

-0.33

Correlation Coefficient

DSV Panalpina  FedEx

Very good diversification

The 3 months correlation between DSV and FedEx is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding DSV Panalpina AS and FedEx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx and DSV Panalpina 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 DSV Panalpina AS 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 DSV Panalpina i.e., DSV Panalpina and FedEx go up and down completely randomly.

Pair Corralation between DSV Panalpina and FedEx

Assuming the 90 days horizon DSV Panalpina is expected to generate 1.34 times less return on investment than FedEx. But when comparing it to its historical volatility, DSV Panalpina AS is 1.01 times less risky than FedEx. It trades about 0.05 of its potential returns per unit of risk. FedEx is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  16,861  in FedEx on September 12, 2024 and sell it today you would earn a total of  11,268  from holding FedEx or generate 66.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

DSV Panalpina AS  vs.  FedEx

DSV Panalpina AS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DSV Panalpina AS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, DSV Panalpina may actually be approaching a critical reversion point that can send shares even higher in January 2025.

FedEx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FedEx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental 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 DSV Panalpina and FedEx

The main advantage of trading using opposite DSV Panalpina and FedEx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DSV Panalpina 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 DSV Panalpina AS 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.

Check out your portfolio center.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.