Correlation Between Covenant Logistics and Marten Transport

Can any of the company-specific risk be diversified away by investing in both Covenant Logistics and Marten Transport 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 Marten Transport 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 Marten Transport, you can compare the effects of market volatilities on Covenant Logistics and Marten Transport 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 Marten Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Covenant Logistics and Marten Transport.

Diversification Opportunities for Covenant Logistics and Marten Transport

0.46

Correlation Coefficient

Covenant Logistics  Marten Transport

Very weak diversification

The 3 months correlation between Covenant and Marten is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Covenant Logistics Group, and Marten Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marten Transport 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 Marten Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marten Transport has no effect on the direction of Covenant Logistics i.e., Covenant Logistics and Marten Transport go up and down completely randomly.

Pair Corralation between Covenant Logistics and Marten Transport

Given the investment horizon of 90 days Covenant Logistics Group, is expected to under-perform the Marten Transport. In addition to that, Covenant Logistics is 4.14 times more volatile than Marten Transport. It trades about -0.17 of its total potential returns per unit of risk. Marten Transport is currently generating about -0.11 per unit of volatility. If you would invest  1,543  in Marten Transport on December 29, 2024 and sell it today you would lose (175.00) from holding Marten Transport or give up 11.34% of portfolio value over 90 days.

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

Covenant Logistics Group,  vs.  Marten Transport

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.

Marten Transport

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marten Transport has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Covenant Logistics and Marten Transport

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

The idea behind Covenant Logistics Group, and Marten Transport 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.