Correlation Between Old Dominion and Aterian
Can any of the company-specific risk be diversified away by investing in both Old Dominion and Aterian 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 Aterian 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 Aterian, you can compare the effects of market volatilities on Old Dominion and Aterian 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 Aterian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Dominion and Aterian.
Diversification Opportunities for Old Dominion and Aterian
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Old and Aterian is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight and Aterian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aterian 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 Aterian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aterian has no effect on the direction of Old Dominion i.e., Old Dominion and Aterian go up and down completely randomly.
Pair Corralation between Old Dominion and Aterian
Given the investment horizon of 90 days Old Dominion Freight is expected to generate 0.84 times more return on investment than Aterian. However, Old Dominion Freight is 1.19 times less risky than Aterian. It trades about 0.19 of its potential returns per unit of risk. Aterian is currently generating about 0.04 per unit of risk. If you would invest 20,132 in Old Dominion Freight on September 1, 2024 and sell it today you would earn a total of 2,382 from holding Old Dominion Freight or generate 11.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Dominion Freight vs. Aterian
Performance |
| Timeline |
| Old Dominion Freight |
| Aterian |
Old Dominion and Aterian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Dominion and Aterian
The main advantage of trading using opposite Old Dominion and Aterian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Dominion position performs unexpectedly, Aterian 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 Aterian will offset losses from the drop in Aterian's long position.| Old Dominion vs. ArcBest Corp | Old Dominion vs. Marten Transport | Old Dominion vs. Werner Enterprises | Old Dominion vs. Knight Transportation |
| Aterian vs. Energy Focu | Aterian vs. Flexsteel Industries | Aterian vs. Ethan Allen Interiors | Aterian vs. FGI Industries |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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