Correlation Between Landstar System and FedEx

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

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

Diversification Opportunities for Landstar System and FedEx

0.11

Correlation Coefficient

Landstar System  FedEx

Average diversification

The 3 months correlation between Landstar and FedEx is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Landstar System and FedEx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx and Landstar System 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 Landstar System 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 Landstar System i.e., Landstar System and FedEx go up and down completely randomly.

Pair Corralation between Landstar System and FedEx

Given the investment horizon of 90 days Landstar System is expected to generate 1.87 times less return on investment than FedEx. But when comparing it to its historical volatility, Landstar System is 1.45 times less risky than FedEx. It trades about 0.03 of its potential returns per unit of risk. FedEx is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  29,205  in FedEx on September 3, 2024 and sell it today you would earn a total of  1,062  from holding FedEx or generate 3.64% return on investment over 90 days.

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

Landstar System  vs.  FedEx

Landstar System

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Landstar System are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Landstar System is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

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.

Pair Trading with Landstar System and FedEx

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

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.