Correlation Between Glanbia PLC and United Parcel
Can any of the company-specific risk be diversified away by investing in both Glanbia PLC 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 Glanbia PLC and United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glanbia PLC and United Parcel Service, you can compare the effects of market volatilities on Glanbia PLC 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 Glanbia PLC with a short position of United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glanbia PLC and United Parcel.
Diversification Opportunities for Glanbia PLC and United Parcel
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Glanbia and United is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Glanbia PLC 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 Glanbia PLC 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 Glanbia PLC 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 Glanbia PLC i.e., Glanbia PLC and United Parcel go up and down completely randomly.
Pair Corralation between Glanbia PLC and United Parcel
Assuming the 90 days trading horizon Glanbia PLC is expected to generate 0.46 times more return on investment than United Parcel. However, Glanbia PLC is 2.19 times less risky than United Parcel. It trades about 0.0 of its potential returns per unit of risk. United Parcel Service is currently generating about -0.16 per unit of risk. If you would invest 1,780 in Glanbia PLC on January 20, 2024 and sell it today you would lose (2.00) from holding Glanbia PLC or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Glanbia PLC vs. United Parcel Service
Performance |
| Timeline |
| Glanbia PLC |
| United Parcel Service |
Glanbia PLC and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glanbia PLC and United Parcel
The main advantage of trading using opposite Glanbia PLC and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glanbia PLC 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.| Glanbia PLC vs. Kingspan Group plc | Glanbia PLC vs. Smurfit Kappa Group | Glanbia PLC vs. Bank of Ireland |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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