Correlation Between Old Dominion and US Xpress
Can any of the company-specific risk be diversified away by investing in both Old Dominion and US Xpress 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 US Xpress 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 US Xpress Enterprises, you can compare the effects of market volatilities on Old Dominion and US Xpress 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 US Xpress. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Dominion and US Xpress.
Diversification Opportunities for Old Dominion and US Xpress
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and USX is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight and US Xpress Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Xpress Enterprises 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 US Xpress. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Xpress Enterprises has no effect on the direction of Old Dominion i.e., Old Dominion and US Xpress go up and down completely randomly.
Pair Corralation between Old Dominion and US Xpress
Given the investment horizon of 90 days Old Dominion Freight is expected to generate 15.94 times more return on investment than US Xpress. However, Old Dominion is 15.94 times more volatile than US Xpress Enterprises. It trades about 0.06 of its potential returns per unit of risk. US Xpress Enterprises is currently generating about 0.15 per unit of risk. If you would invest 15,750 in Old Dominion Freight on August 31, 2024 and sell it today you would earn a total of 6,764 from holding Old Dominion Freight or generate 42.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Old Dominion Freight vs. US Xpress Enterprises
Performance |
| Timeline |
| Old Dominion Freight |
| US Xpress Enterprises |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Old Dominion and US Xpress Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Dominion and US Xpress
The main advantage of trading using opposite Old Dominion and US Xpress positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Dominion position performs unexpectedly, US Xpress 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 US Xpress will offset losses from the drop in US Xpress' long position.| Old Dominion vs. ArcBest Corp | Old Dominion vs. Marten Transport | Old Dominion vs. Werner Enterprises | Old Dominion vs. Knight Transportation |
| US Xpress vs. Heartland Express | US Xpress vs. Universal Logistics Holdings | US Xpress vs. Marten Transport | US Xpress vs. Werner Enterprises |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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