Correlation Between Old Dominion and Bright Scholar
Can any of the company-specific risk be diversified away by investing in both Old Dominion and Bright Scholar 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 Bright Scholar 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 Bright Scholar Education, you can compare the effects of market volatilities on Old Dominion and Bright Scholar 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 Bright Scholar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Dominion and Bright Scholar.
Diversification Opportunities for Old Dominion and Bright Scholar
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Old and Bright is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight and Bright Scholar Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Scholar Education 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 Bright Scholar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Scholar Education has no effect on the direction of Old Dominion i.e., Old Dominion and Bright Scholar go up and down completely randomly.
Pair Corralation between Old Dominion and Bright Scholar
Given the investment horizon of 90 days Old Dominion Freight is expected to generate 0.71 times more return on investment than Bright Scholar. However, Old Dominion Freight is 1.41 times less risky than Bright Scholar. It trades about 0.08 of its potential returns per unit of risk. Bright Scholar Education is currently generating about -0.04 per unit of risk. If you would invest 19,885 in Old Dominion Freight on August 26, 2024 and sell it today you would earn a total of 2,140 from holding Old Dominion Freight or generate 10.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.38% |
| Values | Daily Returns |
Old Dominion Freight vs. Bright Scholar Education
Performance |
| Timeline |
| Old Dominion Freight |
| Bright Scholar Education |
Old Dominion and Bright Scholar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Dominion and Bright Scholar
The main advantage of trading using opposite Old Dominion and Bright Scholar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Dominion position performs unexpectedly, Bright Scholar 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 Bright Scholar will offset losses from the drop in Bright Scholar's long position.| Old Dominion vs. ArcBest Corp | Old Dominion vs. Marten Transport | Old Dominion vs. Werner Enterprises | Old Dominion vs. Knight Transportation |
| Bright Scholar vs. Laureate Education | Bright Scholar vs. China Liberal Education | Bright Scholar vs. Adtalem Global Education | Bright Scholar vs. Grand Canyon Education |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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