Correlation Between ArcBest and Old Dominion
Can any of the company-specific risk be diversified away by investing in both ArcBest and Old Dominion 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 ArcBest and Old Dominion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ArcBest and Old Dominion Freight, you can compare the effects of market volatilities on ArcBest and Old Dominion 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 ArcBest with a short position of Old Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcBest and Old Dominion.
Diversification Opportunities for ArcBest and Old Dominion
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ArcBest and Old is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding ArcBest and Old Dominion Freight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Dominion Freight and ArcBest 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 ArcBest are associated (or correlated) with Old Dominion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Dominion Freight has no effect on the direction of ArcBest i.e., ArcBest and Old Dominion go up and down completely randomly.
Pair Corralation between ArcBest and Old Dominion
Assuming the 90 days horizon ArcBest is expected to generate 1.26 times more return on investment than Old Dominion. However, ArcBest is 1.26 times more volatile than Old Dominion Freight. It trades about 0.03 of its potential returns per unit of risk. Old Dominion Freight is currently generating about 0.02 per unit of risk. If you would invest 6,985 in ArcBest on October 9, 2024 and sell it today you would earn a total of 2,115 from holding ArcBest or generate 30.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ArcBest vs. Old Dominion Freight
Performance |
| Timeline |
| ArcBest |
| Old Dominion Freight |
ArcBest and Old Dominion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcBest and Old Dominion
The main advantage of trading using opposite ArcBest and Old Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcBest position performs unexpectedly, Old Dominion 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 Old Dominion will offset losses from the drop in Old Dominion's long position.| ArcBest vs. CLEAN ENERGY FUELS | ArcBest vs. New Residential Investment | ArcBest vs. DIVERSIFIED ROYALTY | ArcBest vs. PennantPark Investment |
| Old Dominion vs. Saia Inc | Old Dominion vs. SCHNEIDER NATLINC CLB | Old Dominion vs. Werner Enterprises | Old Dominion vs. Seino Holdings Co |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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