Correlation Between Cumulus Media and Old Dominion
Can any of the company-specific risk be diversified away by investing in both Cumulus Media 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 Cumulus Media and Old Dominion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cumulus Media Class and Old Dominion Freight, you can compare the effects of market volatilities on Cumulus Media 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 Cumulus Media with a short position of Old Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumulus Media and Old Dominion.
Diversification Opportunities for Cumulus Media and Old Dominion
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cumulus and Old is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Cumulus Media Class 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 Cumulus Media 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 Cumulus Media Class 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 Cumulus Media i.e., Cumulus Media and Old Dominion go up and down completely randomly.
Pair Corralation between Cumulus Media and Old Dominion
Given the investment horizon of 90 days Cumulus Media Class is expected to under-perform the Old Dominion. In addition to that, Cumulus Media is 2.21 times more volatile than Old Dominion Freight. It trades about -0.27 of its total potential returns per unit of risk. Old Dominion Freight is currently generating about 0.18 per unit of volatility. If you would invest 20,131 in Old Dominion Freight on August 30, 2024 and sell it today you would earn a total of 2,280 from holding Old Dominion Freight or generate 11.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cumulus Media Class vs. Old Dominion Freight
Performance |
| Timeline |
| Cumulus Media Class |
| Old Dominion Freight |
Cumulus Media and Old Dominion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumulus Media and Old Dominion
The main advantage of trading using opposite Cumulus Media and Old Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumulus Media 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.| Cumulus Media vs. E W Scripps | Cumulus Media vs. Gray Television | Cumulus Media vs. ProSiebenSat1 Media AG | Cumulus Media vs. RTL Group SA |
| Old Dominion vs. ArcBest Corp | Old Dominion vs. Marten Transport | Old Dominion vs. Werner Enterprises | Old Dominion vs. Knight Transportation |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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