Correlation Between Schneider National and Knight Transportation
Can any of the company-specific risk be diversified away by investing in both Schneider National and Knight Transportation 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 Schneider National and Knight Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schneider National and Knight Transportation, you can compare the effects of market volatilities on Schneider National and Knight Transportation 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 Schneider National with a short position of Knight Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider National and Knight Transportation.
Diversification Opportunities for Schneider National and Knight Transportation
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Schneider and Knight is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Schneider National and Knight Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knight Transportation and Schneider National 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 Schneider National are associated (or correlated) with Knight Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knight Transportation has no effect on the direction of Schneider National i.e., Schneider National and Knight Transportation go up and down completely randomly.
Pair Corralation between Schneider National and Knight Transportation
Given the investment horizon of 90 days Schneider National is expected to generate 2.79 times less return on investment than Knight Transportation. But when comparing it to its historical volatility, Schneider National is 1.09 times less risky than Knight Transportation. It trades about 0.11 of its potential returns per unit of risk. Knight Transportation is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 5,273 in Knight Transportation on November 2, 2024 and sell it today you would earn a total of 580.00 from holding Knight Transportation or generate 11.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schneider National vs. Knight Transportation
Performance |
| Timeline |
| Schneider National |
| Knight Transportation |
Schneider National and Knight Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schneider National and Knight Transportation
The main advantage of trading using opposite Schneider National and Knight Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider National position performs unexpectedly, Knight Transportation 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 Knight Transportation will offset losses from the drop in Knight Transportation's long position.| Schneider National vs. Marten Transport | Schneider National vs. Heartland Express | Schneider National vs. Universal Logistics Holdings | Schneider National vs. Covenant Logistics Group, |
| Knight Transportation vs. Marten Transport | Knight Transportation vs. Heartland Express | Knight Transportation vs. Universal Logistics Holdings | Knight Transportation vs. Schneider National |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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