Correlation Between USD Partners and Freightcar America
Can any of the company-specific risk be diversified away by investing in both USD Partners and Freightcar America 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 USD Partners and Freightcar America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USD Partners LP and Freightcar America, you can compare the effects of market volatilities on USD Partners and Freightcar America 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 USD Partners with a short position of Freightcar America. Check out your portfolio center. Please also check ongoing floating volatility patterns of USD Partners and Freightcar America.
Diversification Opportunities for USD Partners and Freightcar America
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between USD and Freightcar is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding USD Partners LP and Freightcar America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freightcar America and USD Partners 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 USD Partners LP are associated (or correlated) with Freightcar America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freightcar America has no effect on the direction of USD Partners i.e., USD Partners and Freightcar America go up and down completely randomly.
Pair Corralation between USD Partners and Freightcar America
If you would invest 79.00 in USD Partners LP on September 1, 2024 and sell it today you would earn a total of 0.00 from holding USD Partners LP or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
USD Partners LP vs. Freightcar America
Performance |
| Timeline |
| USD Partners LP |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Freightcar America |
USD Partners and Freightcar America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USD Partners and Freightcar America
The main advantage of trading using opposite USD Partners and Freightcar America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USD Partners position performs unexpectedly, Freightcar America 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 Freightcar America will offset losses from the drop in Freightcar America's long position.| USD Partners vs. Greenbrier Companies | USD Partners vs. LB Foster | USD Partners vs. Freightcar America | USD Partners vs. Westinghouse Air Brake |
| Freightcar America vs. Greenbrier Companies | Freightcar America vs. LB Foster | Freightcar America vs. CSX Corporation | Freightcar America vs. Norfolk Southern |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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