Correlation Between Expeditors International and Forward Air

Can any of the company-specific risk be diversified away by investing in both Expeditors International and Forward Air 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 Expeditors International and Forward Air into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Expeditors International of and Forward Air, you can compare the effects of market volatilities on Expeditors International and Forward Air 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 Expeditors International with a short position of Forward Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expeditors International and Forward Air.

Diversification Opportunities for Expeditors International and Forward Air

0.33

Correlation Coefficient

Expeditors International  Forward Air

Weak diversification

The 3 months correlation between Expeditors and Forward is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Expeditors International of and Forward Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forward Air and Expeditors International 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 Expeditors International of are associated (or correlated) with Forward Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forward Air has no effect on the direction of Expeditors International i.e., Expeditors International and Forward Air go up and down completely randomly.

Pair Corralation between Expeditors International and Forward Air

Given the investment horizon of 90 days Expeditors International of is expected to generate 0.4 times more return on investment than Forward Air. However, Expeditors International of is 2.49 times less risky than Forward Air. It trades about -0.02 of its potential returns per unit of risk. Forward Air is currently generating about -0.18 per unit of risk. If you would invest  12,091  in Expeditors International of on November 29, 2024 and sell it today you would lose (243.00) from holding Expeditors International of or give up 2.01% of portfolio value over 90 days.

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

Expeditors International of  vs.  Forward Air

Expeditors International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Expeditors International of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Expeditors International is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Forward Air

Risk-Adjusted Performance

Very Weak

Over the last 90 days Forward Air has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Expeditors International and Forward Air

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

The idea behind Expeditors International of and Forward Air 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.