Correlation Between Old Dominion and Q2 Metals
Can any of the company-specific risk be diversified away by investing in both Old Dominion and Q2 Metals 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 Q2 Metals 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 Q2 Metals Corp, you can compare the effects of market volatilities on Old Dominion and Q2 Metals 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 Q2 Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Dominion and Q2 Metals.
Diversification Opportunities for Old Dominion and Q2 Metals
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and QUEXF is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight and Q2 Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q2 Metals Corp 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 Q2 Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Q2 Metals Corp has no effect on the direction of Old Dominion i.e., Old Dominion and Q2 Metals go up and down completely randomly.
Pair Corralation between Old Dominion and Q2 Metals
Given the investment horizon of 90 days Old Dominion Freight is expected to generate 0.34 times more return on investment than Q2 Metals. However, Old Dominion Freight is 2.97 times less risky than Q2 Metals. It trades about -0.2 of its potential returns per unit of risk. Q2 Metals Corp is currently generating about -0.12 per unit of risk. If you would invest 21,103 in Old Dominion Freight on November 4, 2024 and sell it today you would lose (2,542) from holding Old Dominion Freight or give up 12.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.56% |
| Values | Daily Returns |
Old Dominion Freight vs. Q2 Metals Corp
Performance |
| Timeline |
| Old Dominion Freight |
| Q2 Metals Corp |
Old Dominion and Q2 Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Dominion and Q2 Metals
The main advantage of trading using opposite Old Dominion and Q2 Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Dominion position performs unexpectedly, Q2 Metals 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 Q2 Metals will offset losses from the drop in Q2 Metals' long position.| Old Dominion vs. ArcBest Corp | Old Dominion vs. Marten Transport | Old Dominion vs. Werner Enterprises | Old Dominion vs. Knight Transportation |
| Q2 Metals vs. Verra Mobility Corp | Q2 Metals vs. Summit Materials | Q2 Metals vs. Tianjin Capital Environmental | Q2 Metals vs. Lindblad Expeditions Holdings |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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