Correlation Between Fiera Capital and UPS CDR

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

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

Diversification Opportunities for Fiera Capital and UPS CDR

0.73

Correlation Coefficient

Fiera Capital  UPS CDR

Poor diversification

The 3 months correlation between Fiera and UPS is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Fiera Capital and UPS CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPS CDR and Fiera Capital 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 Fiera Capital are associated (or correlated) with UPS CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPS CDR has no effect on the direction of Fiera Capital i.e., Fiera Capital and UPS CDR go up and down completely randomly.

Pair Corralation between Fiera Capital and UPS CDR

Assuming the 90 days trading horizon Fiera Capital is expected to generate 1.63 times more return on investment than UPS CDR. However, Fiera Capital is 1.63 times more volatile than UPS CDR. It trades about 0.21 of its potential returns per unit of risk. UPS CDR is currently generating about 0.06 per unit of risk. If you would invest  715.00  in Fiera Capital on September 4, 2024 and sell it today you would earn a total of  249.00  from holding Fiera Capital or generate 34.83% return on investment over 90 days.

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

Fiera Capital  vs.  UPS CDR

Fiera Capital

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fiera Capital are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Fiera Capital displayed solid returns over the last few months and may actually be approaching a breakup point.

UPS CDR

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UPS CDR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, UPS CDR is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fiera Capital and UPS CDR

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

The idea behind Fiera Capital and UPS CDR 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.