Correlation Between US Xpress and Old Dominion
Can any of the company-specific risk be diversified away by investing in both US Xpress 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 US Xpress and Old Dominion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Xpress Enterprises and Old Dominion Freight, you can compare the effects of market volatilities on US Xpress 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 US Xpress with a short position of Old Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Xpress and Old Dominion.
Diversification Opportunities for US Xpress and Old Dominion
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between USX and Old is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding US Xpress Enterprises 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 US Xpress 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 US Xpress Enterprises 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 US Xpress i.e., US Xpress and Old Dominion go up and down completely randomly.
Pair Corralation between US Xpress and Old Dominion
Considering the 90-day investment horizon US Xpress is expected to generate 6.03 times less return on investment than Old Dominion. But when comparing it to its historical volatility, US Xpress Enterprises is 15.94 times less risky than Old Dominion. It trades about 0.15 of its potential returns per unit of risk. Old Dominion Freight is currently generating about 0.06 of returns per unit of risk over similar time horizon. 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 |
US Xpress Enterprises vs. Old Dominion Freight
Performance |
| Timeline |
| US Xpress Enterprises |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Old Dominion Freight |
US Xpress and Old Dominion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Xpress and Old Dominion
The main advantage of trading using opposite US Xpress and Old Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Xpress 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.| US Xpress vs. Heartland Express | US Xpress vs. Universal Logistics Holdings | US Xpress vs. Marten Transport | US Xpress vs. Werner Enterprises |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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