Correlation Between Old Dominion and FirstGroup Plc
Can any of the company-specific risk be diversified away by investing in both Old Dominion and FirstGroup Plc 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 FirstGroup Plc 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 FirstGroup plc, you can compare the effects of market volatilities on Old Dominion and FirstGroup Plc 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 FirstGroup Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Dominion and FirstGroup Plc.
Diversification Opportunities for Old Dominion and FirstGroup Plc
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Old and FirstGroup is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight and FirstGroup plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstGroup plc 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 FirstGroup Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstGroup plc has no effect on the direction of Old Dominion i.e., Old Dominion and FirstGroup Plc go up and down completely randomly.
Pair Corralation between Old Dominion and FirstGroup Plc
Assuming the 90 days horizon Old Dominion Freight is expected to generate 0.8 times more return on investment than FirstGroup Plc. However, Old Dominion Freight is 1.25 times less risky than FirstGroup Plc. It trades about 0.07 of its potential returns per unit of risk. FirstGroup plc is currently generating about -0.01 per unit of risk. If you would invest 17,410 in Old Dominion Freight on November 3, 2024 and sell it today you would earn a total of 335.00 from holding Old Dominion Freight or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Dominion Freight vs. FirstGroup plc
Performance |
| Timeline |
| Old Dominion Freight |
| FirstGroup plc |
Old Dominion and FirstGroup Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Dominion and FirstGroup Plc
The main advantage of trading using opposite Old Dominion and FirstGroup Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Dominion position performs unexpectedly, FirstGroup Plc 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 FirstGroup Plc will offset losses from the drop in FirstGroup Plc's long position.| Old Dominion vs. TELECOM ITALIA | Old Dominion vs. Entravision Communications | Old Dominion vs. Firan Technology Group | Old Dominion vs. Easy Software AG |
| FirstGroup Plc vs. Take Two Interactive Software | FirstGroup Plc vs. Broadridge Financial Solutions | FirstGroup Plc vs. Gold Road Resources | FirstGroup Plc vs. Unity Software |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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