Correlation Between Inter Industries and United Parcel
Can any of the company-specific risk be diversified away by investing in both Inter Industries 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 Inter Industries and United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inter Industries and United Parcel Service, you can compare the effects of market volatilities on Inter Industries 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 Inter Industries with a short position of United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inter Industries and United Parcel.
Diversification Opportunities for Inter Industries and United Parcel
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Inter and United is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Inter Industries 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 Inter Industries 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 Inter Industries 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 Inter Industries i.e., Inter Industries and United Parcel go up and down completely randomly.
Pair Corralation between Inter Industries and United Parcel
Assuming the 90 days trading horizon Inter Industries is expected to under-perform the United Parcel. In addition to that, Inter Industries is 1.36 times more volatile than United Parcel Service. It trades about -0.18 of its total potential returns per unit of risk. United Parcel Service is currently generating about -0.05 per unit of volatility. If you would invest 15,627 in United Parcel Service on December 29, 2023 and sell it today you would lose (894.00) from holding United Parcel Service or give up 5.72% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 83.33% |
Values | Daily Returns |
Inter Industries vs. United Parcel Service
Performance |
Timeline |
Inter Industries |
United Parcel Service |
Inter Industries and United Parcel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Inter Industries and United Parcel
The main advantage of trading using opposite Inter Industries and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inter Industries 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.Inter Industries vs. Hiron Trade Investments Industrial | Inter Industries vs. Internet Gold | Inter Industries vs. Isras Investment | Inter Industries vs. Arad Investment Industrial |
United Parcel vs. Expeditors International | United Parcel vs. Jayud Global Logistics | United Parcel vs. Freightos Limited Warrants | United Parcel vs. JB Hunt Transport |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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