Correlation Between Joint Stock and Old Dominion
Can any of the company-specific risk be diversified away by investing in both Joint Stock 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 Joint Stock and Old Dominion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Joint Stock and Old Dominion Freight, you can compare the effects of market volatilities on Joint Stock 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 Joint Stock with a short position of Old Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Joint Stock and Old Dominion.
Diversification Opportunities for Joint Stock and Old Dominion
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Joint and Old is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Joint Stock 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 Joint Stock 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 Joint Stock 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 Joint Stock i.e., Joint Stock and Old Dominion go up and down completely randomly.
Pair Corralation between Joint Stock and Old Dominion
Given the investment horizon of 90 days Joint Stock is expected to generate 1.41 times more return on investment than Old Dominion. However, Joint Stock is 1.41 times more volatile than Old Dominion Freight. It trades about 0.06 of its potential returns per unit of risk. Old Dominion Freight is currently generating about 0.04 per unit of risk. If you would invest 7,363 in Joint Stock on August 28, 2024 and sell it today you would earn a total of 3,256 from holding Joint Stock or generate 44.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 74.86% |
| Values | Daily Returns |
Joint Stock vs. Old Dominion Freight
Performance |
| Timeline |
| Joint Stock |
| Old Dominion Freight |
Joint Stock and Old Dominion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Joint Stock and Old Dominion
The main advantage of trading using opposite Joint Stock and Old Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Joint Stock 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.| Joint Stock vs. Treasury Wine Estates | Joint Stock vs. Oatly Group AB | Joint Stock vs. Vistra Energy Corp | Joint Stock vs. NRG Energy |
| Old Dominion vs. Knight Transportation | Old Dominion vs. Universal Logistics Holdings | Old Dominion vs. Heartland Express | Old Dominion vs. Schneider National |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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