Correlation Between Aerodrome and United Parcel
Can any of the company-specific risk be diversified away by investing in both Aerodrome 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 Aerodrome and United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerodrome Group and United Parcel Service, you can compare the effects of market volatilities on Aerodrome 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 Aerodrome with a short position of United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerodrome and United Parcel.
Diversification Opportunities for Aerodrome and United Parcel
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aerodrome and United is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Aerodrome Group 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 Aerodrome 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 Aerodrome Group 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 Aerodrome i.e., Aerodrome and United Parcel go up and down completely randomly.
Pair Corralation between Aerodrome and United Parcel
Assuming the 90 days trading horizon Aerodrome Group is expected to generate 4.33 times more return on investment than United Parcel. However, Aerodrome is 4.33 times more volatile than United Parcel Service. It trades about 0.07 of its potential returns per unit of risk. United Parcel Service is currently generating about -0.03 per unit of risk. If you would invest 4,610 in Aerodrome Group on January 24, 2024 and sell it today you would earn a total of 4,060 from holding Aerodrome Group or generate 88.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 78.62% |
Values | Daily Returns |
Aerodrome Group vs. United Parcel Service
Performance |
Timeline |
Aerodrome Group |
United Parcel Service |
Aerodrome and United Parcel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aerodrome and United Parcel
The main advantage of trading using opposite Aerodrome and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerodrome 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.Aerodrome vs. Bank Leumi Le Israel | Aerodrome vs. Teva Pharmaceutical Industries | Aerodrome vs. Bank Hapoalim | Aerodrome vs. Elbit Systems |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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