UNITED PARCEL SERVICE INC managed to outperform the broader market on Tuesday. It surged by +0.42% to close at 97.28. It is currently trading -27% below it's 52 week high of 134.09.
Buy-and-Hold investors in UPS experienced a maximum drawdown of -18.68% over the last three months. It fell by -17.73% during this strong bearish trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +8.43%.
UPS has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 12 Dec, 2016 to 13 Dec, 2018. Over the last 2 years 11 months and 14 days, UPS underperformed the SP500 index on 48% days. Which indicates that on days UPS underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
UPS returned losses on 54% days in the last three months. During this time, it delivered on average -0.29% per day. It delivered it's worst daily return of -7.37%, during this period, on Tuesday, 4 Dec, 2018. The longest stort-term trend during this period was 7 losing days, which started on 7 Dec, 2018 and ended on 17 Dec, 2018. This bearish trend lost -10.8% of investor capital.
During the last year UPS had 7 profitable months and 5 loss making months. UPS returned profits in fewer months than SP500 index. UPS was also a more risky investment than SP500 index as it's worst month in the last year, Feb 2018, returned -17.99% compared to -7.75% returned by SP500 index in Dec 2018. UPS had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both UPS and SP500 index significantly outperform during months when quarterly/annual results are announced.
"There is a huge amount of freedom that is derived from not fighting the market.
UPS is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in UPS's volatility from 19 Sep, 2018 to 12 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that UPS has significant positive skewness in it's return distribution. This indicates that investors can expect UPS to recover from drawdowns quickly. Which makes UPS a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
Investors trading in UPS derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.
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