Correlation Between XPO Logistics and AltaGas
Can any of the company-specific risk be diversified away by investing in both XPO Logistics and AltaGas 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 XPO Logistics and AltaGas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XPO Logistics and AltaGas, you can compare the effects of market volatilities on XPO Logistics and AltaGas 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 XPO Logistics with a short position of AltaGas. Check out your portfolio center. Please also check ongoing floating volatility patterns of XPO Logistics and AltaGas.
Diversification Opportunities for XPO Logistics and AltaGas
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between XPO and AltaGas is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding XPO Logistics and AltaGas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AltaGas and XPO Logistics 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 XPO Logistics are associated (or correlated) with AltaGas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AltaGas has no effect on the direction of XPO Logistics i.e., XPO Logistics and AltaGas go up and down completely randomly.
Pair Corralation between XPO Logistics and AltaGas
Considering the 90-day investment horizon XPO Logistics is expected to generate 1.73 times more return on investment than AltaGas. However, XPO Logistics is 1.73 times more volatile than AltaGas. It trades about 0.03 of its potential returns per unit of risk. AltaGas is currently generating about -0.01 per unit of risk. If you would invest 13,250 in XPO Logistics on November 3, 2024 and sell it today you would earn a total of 117.00 from holding XPO Logistics or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
XPO Logistics vs. AltaGas
Performance |
| Timeline |
| XPO Logistics |
| AltaGas |
XPO Logistics and AltaGas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XPO Logistics and AltaGas
The main advantage of trading using opposite XPO Logistics and AltaGas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XPO Logistics position performs unexpectedly, AltaGas 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 AltaGas will offset losses from the drop in AltaGas' long position.| XPO Logistics vs. Knight Transportation | XPO Logistics vs. Schneider National | XPO Logistics vs. Heartland Express | XPO Logistics vs. Saia Inc |
| AltaGas vs. Navigator Holdings | AltaGas vs. Pembina Pipeline Corp | AltaGas vs. Marine Petroleum Trust | AltaGas vs. Dynagas LNG Partners |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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