Correlation Between Old Dominion and Mullen Group
Can any of the company-specific risk be diversified away by investing in both Old Dominion and Mullen Group 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 Mullen Group 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 Mullen Group, you can compare the effects of market volatilities on Old Dominion and Mullen Group 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 Mullen Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Dominion and Mullen Group.
Diversification Opportunities for Old Dominion and Mullen Group
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Old and Mullen is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight and Mullen Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mullen Group 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 Mullen Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mullen Group has no effect on the direction of Old Dominion i.e., Old Dominion and Mullen Group go up and down completely randomly.
Pair Corralation between Old Dominion and Mullen Group
Given the investment horizon of 90 days Old Dominion Freight is expected to generate 3.37 times more return on investment than Mullen Group. However, Old Dominion is 3.37 times more volatile than Mullen Group. It trades about 0.17 of its potential returns per unit of risk. Mullen Group is currently generating about 0.06 per unit of risk. If you would invest 20,382 in Old Dominion Freight on August 31, 2024 and sell it today you would earn a total of 2,132 from holding Old Dominion Freight or generate 10.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 86.96% |
| Values | Daily Returns |
Old Dominion Freight vs. Mullen Group
Performance |
| Timeline |
| Old Dominion Freight |
| Mullen Group |
Old Dominion and Mullen Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Dominion and Mullen Group
The main advantage of trading using opposite Old Dominion and Mullen Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Dominion position performs unexpectedly, Mullen Group 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 Mullen Group will offset losses from the drop in Mullen Group's long position.| Old Dominion vs. ArcBest Corp | Old Dominion vs. Marten Transport | Old Dominion vs. Werner Enterprises | Old Dominion vs. Knight Transportation |
| Mullen Group vs. ArcBest Corp | Mullen Group vs. Old Dominion Freight | Mullen Group vs. Saia Inc | Mullen Group vs. XPO Logistics |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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