Correlation Between United Guardian and Old Dominion
Can any of the company-specific risk be diversified away by investing in both United Guardian 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 United Guardian and Old Dominion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Guardian and Old Dominion Freight, you can compare the effects of market volatilities on United Guardian 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 United Guardian with a short position of Old Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Guardian and Old Dominion.
Diversification Opportunities for United Guardian and Old Dominion
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Old is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding United Guardian 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 United Guardian 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 United Guardian 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 United Guardian i.e., United Guardian and Old Dominion go up and down completely randomly.
Pair Corralation between United Guardian and Old Dominion
Allowing for the 90-day total investment horizon United Guardian is expected to generate 0.77 times more return on investment than Old Dominion. However, United Guardian is 1.3 times less risky than Old Dominion. It trades about -0.02 of its potential returns per unit of risk. Old Dominion Freight is currently generating about -0.16 per unit of risk. If you would invest 1,053 in United Guardian on November 28, 2024 and sell it today you would lose (16.00) from holding United Guardian or give up 1.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Guardian vs. Old Dominion Freight
Performance |
| Timeline |
| United Guardian |
| Old Dominion Freight |
United Guardian and Old Dominion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Guardian and Old Dominion
The main advantage of trading using opposite United Guardian and Old Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Guardian 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.| United Guardian vs. Utah Medical Products | United Guardian vs. Union Bankshares | United Guardian vs. Unity Bancorp |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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