Correlation Between KSM Mutual and United Parcel

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Can any of the company-specific risk be diversified away by investing in both KSM Mutual 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 KSM Mutual and United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KSM Mutual Funds and United Parcel Service, you can compare the effects of market volatilities on KSM Mutual 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 KSM Mutual with a short position of United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of KSM Mutual and United Parcel.

Diversification Opportunities for KSM Mutual and United Parcel

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between KSM and United is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding KSM Mutual Funds 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 KSM Mutual 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 KSM Mutual Funds 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 KSM Mutual i.e., KSM Mutual and United Parcel go up and down completely randomly.

Pair Corralation between KSM Mutual and United Parcel

Assuming the 90 days trading horizon KSM Mutual Funds is expected to under-perform the United Parcel. But the etf apears to be less risky and, when comparing its historical volatility, KSM Mutual Funds is 12.5 times less risky than United Parcel. The etf trades about -0.05 of its potential returns per unit of risk. The United Parcel Service is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  14,827  in United Parcel Service on December 29, 2023 and sell it today you would lose (94.00) from holding United Parcel Service or give up 0.63% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy72.73%
ValuesDaily Returns

KSM Mutual Funds  vs.  United Parcel Service

 Performance 
       Timeline  
KSM Mutual Funds 

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days KSM Mutual Funds has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, KSM Mutual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
United Parcel Service 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days United Parcel Service has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, United Parcel is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

KSM Mutual and United Parcel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KSM Mutual and United Parcel

The main advantage of trading using opposite KSM Mutual and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KSM Mutual 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.
The idea behind KSM Mutual Funds and United Parcel Service 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.
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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