Correlation Between Prosegur Cash and United Parcel

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

By analyzing existing cross correlation between Prosegur Cash SA and United Parcel Service, you can compare the effects of market volatilities on Prosegur Cash and United Parcel 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 Prosegur Cash with a short position of United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosegur Cash and United Parcel.

Diversification Opportunities for Prosegur Cash and United Parcel

-0.45

Correlation Coefficient

Prosegur Cash  United Parcel

Very good diversification

The 3 months correlation between Prosegur and United is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Prosegur Cash SA and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service and Prosegur Cash 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 Prosegur Cash SA are associated (or correlated) with United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of Prosegur Cash i.e., Prosegur Cash and United Parcel go up and down completely randomly.

Pair Corralation between Prosegur Cash and United Parcel

Assuming the 90 days horizon Prosegur Cash is expected to generate 48.5 times less return on investment than United Parcel. But when comparing it to its historical volatility, Prosegur Cash SA is 3.58 times less risky than United Parcel. It trades about 0.0 of its potential returns per unit of risk. United Parcel Service is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  12,735  in United Parcel Service on September 4, 2024 and sell it today you would earn a total of  236.00  from holding United Parcel Service or generate 1.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	54.69%
Values	Daily Returns

Prosegur Cash SA  vs.  United Parcel Service

Prosegur Cash SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosegur Cash SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Prosegur Cash is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

United Parcel Service

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United Parcel Service are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, United Parcel is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Prosegur Cash and United Parcel

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

The idea behind Prosegur Cash SA and United Parcel Service 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.