Correlation Between Cognex and United Parcel
Can any of the company-specific risk be diversified away by investing in both Cognex 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 Cognex and United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cognex and United Parcel Service, you can compare the effects of market volatilities on Cognex 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 Cognex with a short position of United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognex and United Parcel.
Diversification Opportunities for Cognex and United Parcel
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cognex and United is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Cognex 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 Cognex 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 Cognex 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 Cognex i.e., Cognex and United Parcel go up and down completely randomly.
Pair Corralation between Cognex and United Parcel
Given the investment horizon of 90 days Cognex is expected to generate 1.65 times more return on investment than United Parcel. However, Cognex is 1.65 times more volatile than United Parcel Service. It trades about 0.3 of its potential returns per unit of risk. United Parcel Service is currently generating about 0.01 per unit of risk. If you would invest 4,130 in Cognex on February 11, 2024 and sell it today you would earn a total of 512.00 from holding Cognex or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognex vs. United Parcel Service
Performance |
| Timeline |
| Cognex |
| United Parcel Service |
Cognex and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognex and United Parcel
The main advantage of trading using opposite Cognex and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognex 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.| Cognex vs. Vontier Corp | Cognex vs. Teledyne Technologies Incorporated | Cognex vs. ESCO Technologies | Cognex vs. MKS Instruments |
| United Parcel vs. Expeditors International of | United Parcel vs. Aquagold International | United Parcel vs. Morningstar Unconstrained Allocation | United Parcel vs. Via Renewables |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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