Correlation Between Covenant Logistics and Atlas Corp

Can any of the company-specific risk be diversified away by investing in both Covenant Logistics and Atlas Corp 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 Covenant Logistics and Atlas Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Covenant Logistics Group, and Atlas Corp, you can compare the effects of market volatilities on Covenant Logistics and Atlas Corp 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 Covenant Logistics with a short position of Atlas Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Covenant Logistics and Atlas Corp.

Diversification Opportunities for Covenant Logistics and Atlas Corp

-0.71

Correlation Coefficient

Covenant Logistics  Atlas Corp

Pay attention - limited upside

The 3 months correlation between Covenant and Atlas is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Covenant Logistics Group, and Atlas Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Corp and Covenant 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 Covenant Logistics Group, are associated (or correlated) with Atlas Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Corp has no effect on the direction of Covenant Logistics i.e., Covenant Logistics and Atlas Corp go up and down completely randomly.

Pair Corralation between Covenant Logistics and Atlas Corp

Given the investment horizon of 90 days Covenant Logistics Group, is expected to under-perform the Atlas Corp. In addition to that, Covenant Logistics is 20.39 times more volatile than Atlas Corp. It trades about -0.17 of its total potential returns per unit of risk. Atlas Corp is currently generating about 0.13 per unit of volatility. If you would invest  2,457  in Atlas Corp on December 28, 2024 and sell it today you would earn a total of  63.56  from holding Atlas Corp or generate 2.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Covenant Logistics Group,  vs.  Atlas Corp

Covenant Logistics Group,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Covenant Logistics Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Atlas Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Atlas Corp is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Covenant Logistics and Atlas Corp

The main advantage of trading using opposite Covenant Logistics and Atlas Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Covenant Logistics position performs unexpectedly, Atlas Corp 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 Atlas Corp will offset losses from the drop in Atlas Corp's long position.

The idea behind Covenant Logistics Group, and Atlas Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.