Correlation Between Old Dominion and ArcBest
Can any of the company-specific risk be diversified away by investing in both Old Dominion and ArcBest 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 Old Dominion and ArcBest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Dominion Freight and ArcBest, you can compare the effects of market volatilities on Old Dominion and ArcBest 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 Old Dominion with a short position of ArcBest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Dominion and ArcBest.
Diversification Opportunities for Old Dominion and ArcBest
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Old and ArcBest is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight and ArcBest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcBest and Old Dominion 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 Old Dominion Freight are associated (or correlated) with ArcBest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcBest has no effect on the direction of Old Dominion i.e., Old Dominion and ArcBest go up and down completely randomly.
Pair Corralation between Old Dominion and ArcBest
Assuming the 90 days horizon Old Dominion is expected to generate 1.28 times less return on investment than ArcBest. But when comparing it to its historical volatility, Old Dominion Freight is 1.26 times less risky than ArcBest. It trades about 0.04 of its potential returns per unit of risk. ArcBest is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,687 in ArcBest on September 12, 2024 and sell it today you would earn a total of 3,713 from holding ArcBest or generate 55.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Dominion Freight vs. ArcBest
Performance |
| Timeline |
| Old Dominion Freight |
| ArcBest |
Old Dominion and ArcBest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Dominion and ArcBest
The main advantage of trading using opposite Old Dominion and ArcBest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Dominion position performs unexpectedly, ArcBest 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 ArcBest will offset losses from the drop in ArcBest's long position.| Old Dominion vs. SCHNEIDER NATLINC CLB | Old Dominion vs. Fukuyama Transporting Co | Old Dominion vs. Superior Plus Corp | Old Dominion vs. SIVERS SEMICONDUCTORS AB |
| ArcBest vs. SCHNEIDER NATLINC CLB | ArcBest vs. Fukuyama Transporting Co | ArcBest vs. Superior Plus Corp | ArcBest vs. SIVERS SEMICONDUCTORS AB |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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