Correlation Between Covenant Logistics and PC Connection
Can any of the company-specific risk be diversified away by investing in both Covenant Logistics and PC Connection 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 Covenant Logistics and PC Connection into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Covenant Logistics Group, and PC Connection, you can compare the effects of market volatilities on Covenant Logistics and PC Connection 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 Covenant Logistics with a short position of PC Connection. Check out your portfolio center. Please also check ongoing floating volatility patterns of Covenant Logistics and PC Connection.
Diversification Opportunities for Covenant Logistics and PC Connection
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Covenant and CNXN is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Covenant Logistics Group, and PC Connection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PC Connection and Covenant Logistics 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 Covenant Logistics Group, are associated (or correlated) with PC Connection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PC Connection has no effect on the direction of Covenant Logistics i.e., Covenant Logistics and PC Connection go up and down completely randomly.
Pair Corralation between Covenant Logistics and PC Connection
Given the investment horizon of 90 days Covenant Logistics Group, is expected to under-perform the PC Connection. In addition to that, Covenant Logistics is 12.76 times more volatile than PC Connection. It trades about -0.2 of its total potential returns per unit of risk. PC Connection is currently generating about 0.18 per unit of volatility. If you would invest 7,021 in PC Connection on October 23, 2024 and sell it today you would earn a total of 218.00 from holding PC Connection or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Covenant Logistics Group, vs. PC Connection
Performance |
| Timeline |
| Covenant Logistics Group, |
| PC Connection |
Covenant Logistics and PC Connection Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Covenant Logistics and PC Connection
The main advantage of trading using opposite Covenant Logistics and PC Connection positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Covenant Logistics position performs unexpectedly, PC Connection 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 PC Connection will offset losses from the drop in PC Connection's long position.| Covenant Logistics vs. Marten Transport | Covenant Logistics vs. Werner Enterprises | Covenant Logistics vs. Universal Logistics Holdings | Covenant Logistics vs. Schneider National |
| PC Connection vs. ScanSource | PC Connection vs. Insight Enterprises | PC Connection vs. Avnet Inc | PC Connection vs. Synnex |
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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