Correlation Between BEST and RXO
Can any of the company-specific risk be diversified away by investing in both BEST and RXO 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 BEST and RXO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BEST Inc and RXO Inc, you can compare the effects of market volatilities on BEST and RXO 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 BEST with a short position of RXO. Check out your portfolio center. Please also check ongoing floating volatility patterns of BEST and RXO.
Diversification Opportunities for BEST and RXO
Excellent diversification
The 3 months correlation between BEST and RXO is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding BEST Inc and RXO Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RXO Inc and BEST 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 BEST Inc are associated (or correlated) with RXO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RXO Inc has no effect on the direction of BEST i.e., BEST and RXO go up and down completely randomly.
Pair Corralation between BEST and RXO
Given the investment horizon of 90 days BEST Inc is expected to generate 0.14 times more return on investment than RXO. However, BEST Inc is 7.13 times less risky than RXO. It trades about 0.22 of its potential returns per unit of risk. RXO Inc is currently generating about -0.1 per unit of risk. If you would invest 265.00 in BEST Inc on December 26, 2024 and sell it today you would earn a total of 13.00 from holding BEST Inc or generate 4.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 81.67% |
Values | Daily Returns |
BEST Inc vs. RXO Inc
Performance |
Timeline |
BEST Inc |
Risk-Adjusted Performance
Solid
Weak | Strong |
RXO Inc |
BEST and RXO Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BEST and RXO
The main advantage of trading using opposite BEST and RXO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BEST position performs unexpectedly, RXO 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 RXO will offset losses from the drop in RXO's long position.BEST vs. Heartland Express | BEST vs. Universal Logistics Holdings | BEST vs. Marten Transport | BEST vs. Werner Enterprises |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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