Correlation Between PAM Transportation and Old Dominion
Can any of the company-specific risk be diversified away by investing in both PAM Transportation and Old Dominion 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 PAM Transportation and Old Dominion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PAM Transportation Services and Old Dominion Freight, you can compare the effects of market volatilities on PAM Transportation and Old Dominion 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 PAM Transportation with a short position of Old Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of PAM Transportation and Old Dominion.
Diversification Opportunities for PAM Transportation and Old Dominion
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PAM and Old is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding PAM Transportation Services and Old Dominion Freight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Dominion Freight and PAM Transportation 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 PAM Transportation Services are associated (or correlated) with Old Dominion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Dominion Freight has no effect on the direction of PAM Transportation i.e., PAM Transportation and Old Dominion go up and down completely randomly.
Pair Corralation between PAM Transportation and Old Dominion
Given the investment horizon of 90 days PAM Transportation Services is expected to generate 1.73 times more return on investment than Old Dominion. However, PAM Transportation is 1.73 times more volatile than Old Dominion Freight. It trades about 0.04 of its potential returns per unit of risk. Old Dominion Freight is currently generating about 0.04 per unit of risk. If you would invest 1,696 in PAM Transportation Services on August 24, 2024 and sell it today you would earn a total of 484.00 from holding PAM Transportation Services or generate 28.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.41% |
| Values | Daily Returns |
PAM Transportation Services vs. Old Dominion Freight
Performance |
| Timeline |
| PAM Transportation |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Old Dominion Freight |
PAM Transportation and Old Dominion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PAM Transportation and Old Dominion
The main advantage of trading using opposite PAM Transportation and Old Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PAM Transportation position performs unexpectedly, Old Dominion 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 Old Dominion will offset losses from the drop in Old Dominion's long position.| PAM Transportation vs. Heartland Express | PAM Transportation vs. Werner Enterprises | PAM Transportation vs. Universal Logistics Holdings | PAM Transportation vs. Schneider National |
| Old Dominion vs. ArcBest Corp | Old Dominion vs. Marten Transport | Old Dominion vs. Werner Enterprises | Old Dominion vs. Knight Transportation |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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