Correlation Between Royal Mail and CH Robinson

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

By analyzing existing cross correlation between Royal Mail PLC and CH Robinson Worldwide, you can compare the effects of market volatilities on Royal Mail and CH Robinson 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 Royal Mail with a short position of CH Robinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Mail and CH Robinson.

Diversification Opportunities for Royal Mail and CH Robinson

-0.17

Correlation Coefficient

Royal Mail  CH Robinson

Good diversification

The 3 months correlation between Royal and CHRW is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Royal Mail PLC and CH Robinson Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CH Robinson Worldwide and Royal Mail 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 Royal Mail PLC are associated (or correlated) with CH Robinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CH Robinson Worldwide has no effect on the direction of Royal Mail i.e., Royal Mail and CH Robinson go up and down completely randomly.

Pair Corralation between Royal Mail and CH Robinson

Assuming the 90 days horizon Royal Mail PLC is expected to under-perform the CH Robinson. But the pink sheet apears to be less risky and, when comparing its historical volatility, Royal Mail PLC is 1.89 times less risky than CH Robinson. The pink sheet trades about -0.01 of its potential returns per unit of risk. The CH Robinson Worldwide is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  10,298  in CH Robinson Worldwide on September 3, 2024 and sell it today you would earn a total of  260.00  from holding CH Robinson Worldwide or generate 2.52% return on investment over 90 days.

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

Royal Mail PLC  vs.  CH Robinson Worldwide

Royal Mail PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royal Mail PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Royal Mail is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CH Robinson Worldwide

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Royal Mail and CH Robinson

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

The idea behind Royal Mail PLC and CH Robinson Worldwide 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.