Correlation Between FBR and United Express
Can any of the company-specific risk be diversified away by investing in both FBR and United Express 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 FBR and United Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FBR Limited and United Express, you can compare the effects of market volatilities on FBR and United Express 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 FBR with a short position of United Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of FBR and United Express.
Diversification Opportunities for FBR and United Express
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between FBR and United is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding FBR Limited and United Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Express and FBR 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 FBR Limited are associated (or correlated) with United Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Express has no effect on the direction of FBR i.e., FBR and United Express go up and down completely randomly.
Pair Corralation between FBR and United Express
Assuming the 90 days horizon FBR Limited is expected to generate 2.7 times more return on investment than United Express. However, FBR is 2.7 times more volatile than United Express. It trades about 0.05 of its potential returns per unit of risk. United Express is currently generating about -0.05 per unit of risk. If you would invest 0.40 in FBR Limited on August 21, 2025 and sell it today you would lose (0.12) from holding FBR Limited or give up 30.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FBR Limited vs. United Express
Performance |
| Timeline |
| FBR Limited |
| United Express |
FBR and United Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FBR and United Express
The main advantage of trading using opposite FBR and United Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FBR position performs unexpectedly, United Express 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 Express will offset losses from the drop in United Express' long position.The idea behind FBR Limited and United Express 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.| United Express vs. Cavitation Techs | United Express vs. Next10 Inc | United Express vs. FBR Limited | United Express vs. IBC Advanced Alloys |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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