Correlation Between United Parcel and Target
Can any of the company-specific risk be diversified away by investing in both United Parcel and Target 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 United Parcel and Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Parcel Service and Target, you can compare the effects of market volatilities on United Parcel and Target 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 United Parcel with a short position of Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Parcel and Target.
Diversification Opportunities for United Parcel and Target
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and Target is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target and United Parcel 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 United Parcel Service are associated (or correlated) with Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of United Parcel i.e., United Parcel and Target go up and down completely randomly.
Pair Corralation between United Parcel and Target
Considering the 90-day investment horizon United Parcel Service is expected to under-perform the Target. But the stock apears to be less risky and, when comparing its historical volatility, United Parcel Service is 1.33 times less risky than Target. The stock trades about -0.05 of its potential returns per unit of risk. The Target is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 14,989 in Target on January 20, 2024 and sell it today you would earn a total of 1,841 from holding Target or generate 12.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Parcel Service vs. Target
Performance |
| Timeline |
| United Parcel Service |
| Target |
United Parcel and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Parcel and Target
The main advantage of trading using opposite United Parcel and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parcel position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.The idea behind United Parcel Service and Target 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.| Target vs. Aquagold International | Target vs. Morningstar Unconstrained Allocation | Target vs. Thrivent High Yield | Target 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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |