Correlation Between Heartland Express and XPO Logistics
Can any of the company-specific risk be diversified away by investing in both Heartland Express and XPO Logistics 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 Heartland Express and XPO Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heartland Express and XPO Logistics, you can compare the effects of market volatilities on Heartland Express and XPO Logistics 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 Heartland Express with a short position of XPO Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Express and XPO Logistics.
Diversification Opportunities for Heartland Express and XPO Logistics
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Heartland and XPO is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Express and XPO Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XPO Logistics and Heartland Express 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 Heartland Express are associated (or correlated) with XPO Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XPO Logistics has no effect on the direction of Heartland Express i.e., Heartland Express and XPO Logistics go up and down completely randomly.
Pair Corralation between Heartland Express and XPO Logistics
Given the investment horizon of 90 days Heartland Express is expected to generate 4.1 times less return on investment than XPO Logistics. But when comparing it to its historical volatility, Heartland Express is 1.52 times less risky than XPO Logistics. It trades about 0.15 of its potential returns per unit of risk. XPO Logistics is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 11,083 in XPO Logistics on August 23, 2024 and sell it today you would earn a total of 3,886 from holding XPO Logistics or generate 35.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heartland Express vs. XPO Logistics
Performance |
| Timeline |
| Heartland Express |
| XPO Logistics |
Heartland Express and XPO Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heartland Express and XPO Logistics
The main advantage of trading using opposite Heartland Express and XPO Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Express position performs unexpectedly, XPO Logistics 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 XPO Logistics will offset losses from the drop in XPO Logistics' long position.| Heartland Express vs. Werner Enterprises | Heartland Express vs. Universal Logistics Holdings | Heartland Express vs. Schneider National | Heartland Express vs. Marten Transport |
| XPO Logistics vs. Knight Transportation | XPO Logistics vs. Schneider National | XPO Logistics vs. Heartland Express | XPO Logistics vs. Saia Inc |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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