Correlation Between Old Dominion and LithiumBank Resources
Can any of the company-specific risk be diversified away by investing in both Old Dominion and LithiumBank Resources 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 LithiumBank Resources 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 LithiumBank Resources Corp, you can compare the effects of market volatilities on Old Dominion and LithiumBank Resources 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 LithiumBank Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Dominion and LithiumBank Resources.
Diversification Opportunities for Old Dominion and LithiumBank Resources
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Old and LithiumBank is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight and LithiumBank Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LithiumBank Resources 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 LithiumBank Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LithiumBank Resources has no effect on the direction of Old Dominion i.e., Old Dominion and LithiumBank Resources go up and down completely randomly.
Pair Corralation between Old Dominion and LithiumBank Resources
Given the investment horizon of 90 days Old Dominion Freight is expected to generate 0.46 times more return on investment than LithiumBank Resources. However, Old Dominion Freight is 2.18 times less risky than LithiumBank Resources. It trades about 0.06 of its potential returns per unit of risk. LithiumBank Resources Corp is currently generating about -0.02 per unit of risk. If you would invest 14,213 in Old Dominion Freight on August 28, 2024 and sell it today you would earn a total of 8,298 from holding Old Dominion Freight or generate 58.38% 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. LithiumBank Resources Corp
Performance |
| Timeline |
| Old Dominion Freight |
| LithiumBank Resources |
Old Dominion and LithiumBank Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Dominion and LithiumBank Resources
The main advantage of trading using opposite Old Dominion and LithiumBank Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Dominion position performs unexpectedly, LithiumBank Resources 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 LithiumBank Resources will offset losses from the drop in LithiumBank Resources' long position.| Old Dominion vs. ArcBest Corp | Old Dominion vs. Marten Transport | Old Dominion vs. Werner Enterprises | Old Dominion vs. Knight Transportation |
| LithiumBank Resources vs. Qubec Nickel Corp | LithiumBank Resources vs. IGO Limited | LithiumBank Resources vs. Focus Graphite | LithiumBank Resources vs. Mineral Res |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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