Correlation Between Marten Transport and Covenant Logistics
Can any of the company-specific risk be diversified away by investing in both Marten Transport and Covenant 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 Marten Transport and Covenant Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marten Transport and Covenant Logistics Group,, you can compare the effects of market volatilities on Marten Transport and Covenant 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 Marten Transport with a short position of Covenant Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marten Transport and Covenant Logistics.
Diversification Opportunities for Marten Transport and Covenant Logistics
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Marten and Covenant is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Marten Transport and Covenant Logistics Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covenant Logistics Group, and Marten Transport 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 Marten Transport are associated (or correlated) with Covenant Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covenant Logistics Group, has no effect on the direction of Marten Transport i.e., Marten Transport and Covenant Logistics go up and down completely randomly.
Pair Corralation between Marten Transport and Covenant Logistics
Given the investment horizon of 90 days Marten Transport is expected to generate 1.89 times less return on investment than Covenant Logistics. But when comparing it to its historical volatility, Marten Transport is 1.11 times less risky than Covenant Logistics. It trades about 0.12 of its potential returns per unit of risk. Covenant Logistics Group, is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 5,154 in Covenant Logistics Group, on August 24, 2024 and sell it today you would earn a total of 623.00 from holding Covenant Logistics Group, or generate 12.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marten Transport vs. Covenant Logistics Group,
Performance |
| Timeline |
| Marten Transport |
| Covenant Logistics Group, |
Marten Transport and Covenant Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marten Transport and Covenant Logistics
The main advantage of trading using opposite Marten Transport and Covenant Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marten Transport position performs unexpectedly, Covenant 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 Covenant Logistics will offset losses from the drop in Covenant Logistics' long position.| Marten Transport vs. Werner Enterprises | Marten Transport vs. Covenant Logistics Group, | Marten Transport vs. Universal Logistics Holdings | Marten Transport vs. Schneider National |
| Covenant Logistics vs. Marten Transport | Covenant Logistics vs. Werner Enterprises | Covenant Logistics vs. Universal Logistics Holdings | Covenant Logistics 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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