Correlation Between Old Dominion and Canlan Ice
Can any of the company-specific risk be diversified away by investing in both Old Dominion and Canlan Ice 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 Canlan Ice 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 Canlan Ice Sports, you can compare the effects of market volatilities on Old Dominion and Canlan Ice 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 Canlan Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Dominion and Canlan Ice.
Diversification Opportunities for Old Dominion and Canlan Ice
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Old and Canlan is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight and Canlan Ice Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canlan Ice Sports 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 Canlan Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canlan Ice Sports has no effect on the direction of Old Dominion i.e., Old Dominion and Canlan Ice go up and down completely randomly.
Pair Corralation between Old Dominion and Canlan Ice
Given the investment horizon of 90 days Old Dominion Freight is expected to generate 20.4 times more return on investment than Canlan Ice. However, Old Dominion is 20.4 times more volatile than Canlan Ice Sports. It trades about 0.05 of its potential returns per unit of risk. Canlan Ice Sports is currently generating about 0.13 per unit of risk. If you would invest 14,319 in Old Dominion Freight on August 26, 2024 and sell it today you would earn a total of 7,706 from holding Old Dominion Freight or generate 53.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Dominion Freight vs. Canlan Ice Sports
Performance |
| Timeline |
| Old Dominion Freight |
| Canlan Ice Sports |
Old Dominion and Canlan Ice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Dominion and Canlan Ice
The main advantage of trading using opposite Old Dominion and Canlan Ice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Dominion position performs unexpectedly, Canlan Ice 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 Canlan Ice will offset losses from the drop in Canlan Ice's long position.| Old Dominion vs. ArcBest Corp | Old Dominion vs. Marten Transport | Old Dominion vs. Werner Enterprises | Old Dominion vs. Knight Transportation |
| Canlan Ice vs. HUMANA INC | Canlan Ice vs. Aquagold International | Canlan Ice vs. Barloworld Ltd ADR | Canlan Ice vs. Morningstar Unconstrained Allocation |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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