Correlation Between Forward Air and ZTO Express
Can any of the company-specific risk be diversified away by investing in both Forward Air and ZTO 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 Forward Air and ZTO Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forward Air and ZTO Express, you can compare the effects of market volatilities on Forward Air and ZTO 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 Forward Air with a short position of ZTO Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forward Air and ZTO Express.
Diversification Opportunities for Forward Air and ZTO Express
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Forward and ZTO is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Forward Air and ZTO Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTO Express and Forward Air 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 Forward Air are associated (or correlated) with ZTO Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZTO Express has no effect on the direction of Forward Air i.e., Forward Air and ZTO Express go up and down completely randomly.
Pair Corralation between Forward Air and ZTO Express
Given the investment horizon of 90 days Forward Air is expected to generate 1.83 times more return on investment than ZTO Express. However, Forward Air is 1.83 times more volatile than ZTO Express. It trades about -0.03 of its potential returns per unit of risk. ZTO Express is currently generating about -0.57 per unit of risk. If you would invest 3,675 in Forward Air on August 24, 2024 and sell it today you would lose (107.00) from holding Forward Air or give up 2.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Forward Air vs. ZTO Express
Performance |
| Timeline |
| Forward Air |
| ZTO Express |
Forward Air and ZTO Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forward Air and ZTO Express
The main advantage of trading using opposite Forward Air and ZTO Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forward Air position performs unexpectedly, ZTO 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 ZTO Express will offset losses from the drop in ZTO Express' long position.| Forward Air vs. Landstar System | Forward Air vs. JB Hunt Transport | Forward Air vs. Expeditors International of | Forward Air vs. CH Robinson Worldwide |
| ZTO Express vs. Forward Air | ZTO Express vs. Landstar System | ZTO Express vs. JB Hunt Transport | ZTO Express vs. Expeditors International of |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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