Correlation Between Old Dominion and GoHealth
Can any of the company-specific risk be diversified away by investing in both Old Dominion and GoHealth 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 GoHealth 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 GoHealth, you can compare the effects of market volatilities on Old Dominion and GoHealth 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 GoHealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Dominion and GoHealth.
Diversification Opportunities for Old Dominion and GoHealth
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and GoHealth is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight and GoHealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoHealth 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 GoHealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoHealth has no effect on the direction of Old Dominion i.e., Old Dominion and GoHealth go up and down completely randomly.
Pair Corralation between Old Dominion and GoHealth
Given the investment horizon of 90 days Old Dominion Freight is expected to generate 0.46 times more return on investment than GoHealth. However, Old Dominion Freight is 2.18 times less risky than GoHealth. It trades about 0.04 of its potential returns per unit of risk. GoHealth is currently generating about 0.01 per unit of risk. If you would invest 18,862 in Old Dominion Freight on August 25, 2024 and sell it today you would earn a total of 3,163 from holding Old Dominion Freight or generate 16.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Dominion Freight vs. GoHealth
Performance |
| Timeline |
| Old Dominion Freight |
| GoHealth |
Old Dominion and GoHealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Dominion and GoHealth
The main advantage of trading using opposite Old Dominion and GoHealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Dominion position performs unexpectedly, GoHealth 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 GoHealth will offset losses from the drop in GoHealth's long position.| Old Dominion vs. ArcBest Corp | Old Dominion vs. Marten Transport | Old Dominion vs. Werner Enterprises | Old Dominion vs. Knight Transportation |
| GoHealth vs. eHealth | GoHealth vs. Tian Ruixiang Holdings | GoHealth vs. Huize Holding | GoHealth vs. Selectquote |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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