Correlation Between FedEx and DSV Panalpina

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

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

Diversification Opportunities for FedEx and DSV Panalpina

-0.46

Correlation Coefficient

FedEx  DSV Panalpina

Very good diversification

The 3 months correlation between FedEx and DSV is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding FedEx and DSV Panalpina AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSV Panalpina AS 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 are associated (or correlated) with DSV Panalpina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSV Panalpina AS has no effect on the direction of FedEx i.e., FedEx and DSV Panalpina go up and down completely randomly.

Pair Corralation between FedEx and DSV Panalpina

Considering the 90-day investment horizon FedEx is expected to generate 2.99 times less return on investment than DSV Panalpina. But when comparing it to its historical volatility, FedEx is 1.29 times less risky than DSV Panalpina. It trades about 0.04 of its potential returns per unit of risk. DSV Panalpina AS is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  18,417  in DSV Panalpina AS on September 3, 2024 and sell it today you would earn a total of  2,627  from holding DSV Panalpina AS or generate 14.26% return on investment over 90 days.

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

FedEx  vs.  DSV Panalpina AS

FedEx

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FedEx are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, FedEx is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

DSV Panalpina AS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DSV Panalpina AS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DSV Panalpina reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FedEx and DSV Panalpina

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

The idea behind FedEx and DSV Panalpina AS 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.