Correlation Between Ryder System and United Parcel

Can any of the company-specific risk be diversified away by investing in both Ryder System 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 Ryder System and United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ryder System and United Parcel Service, you can compare the effects of market volatilities on Ryder System 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 Ryder System with a short position of United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryder System and United Parcel.

Diversification Opportunities for Ryder System and United Parcel

0.11

Correlation Coefficient

Ryder System  United Parcel

Average diversification

The 3 months correlation between Ryder and United is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ryder System 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 Ryder System 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 Ryder System 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 Ryder System i.e., Ryder System and United Parcel go up and down completely randomly.

Pair Corralation between Ryder System and United Parcel

Taking into account the 90-day investment horizon Ryder System is expected to generate 1.09 times more return on investment than United Parcel. However, Ryder System is 1.09 times more volatile than United Parcel Service. It trades about 0.09 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  9,663  in Ryder System on January 24, 2024 and sell it today you would earn a total of  2,538  from holding Ryder System or generate 26.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ryder System  vs.  United Parcel Service

Ryder System

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ryder System has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Ryder System is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

United Parcel Service

Risk-Adjusted Performance

0 of 100

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ryder System and United Parcel

The main advantage of trading using opposite Ryder System and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryder System 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 Ryder System 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.

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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 Stocks Directory module to find actively traded stocks across global markets.