Correlation Between FORWARD AIR and Sixt Leasing

Can any of the company-specific risk be diversified away by investing in both FORWARD AIR and Sixt Leasing 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 FORWARD AIR and Sixt Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FORWARD AIR P and Sixt Leasing SE, you can compare the effects of market volatilities on FORWARD AIR and Sixt Leasing 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 FORWARD AIR with a short position of Sixt Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORWARD AIR and Sixt Leasing.

Diversification Opportunities for FORWARD AIR and Sixt Leasing

0.45

Correlation Coefficient

FORWARD AIR  Sixt Leasing

Very weak diversification

The 3 months correlation between FORWARD and Sixt is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding FORWARD AIR P and Sixt Leasing SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixt Leasing SE and FORWARD AIR 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 FORWARD AIR P are associated (or correlated) with Sixt Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixt Leasing SE has no effect on the direction of FORWARD AIR i.e., FORWARD AIR and Sixt Leasing go up and down completely randomly.

Pair Corralation between FORWARD AIR and Sixt Leasing

Assuming the 90 days horizon FORWARD AIR P is expected to under-perform the Sixt Leasing. In addition to that, FORWARD AIR is 2.76 times more volatile than Sixt Leasing SE. It trades about -0.03 of its total potential returns per unit of risk. Sixt Leasing SE is currently generating about -0.02 per unit of volatility. If you would invest  1,152  in Sixt Leasing SE on October 27, 2024 and sell it today you would lose (227.00) from holding Sixt Leasing SE or give up 19.7% of portfolio value over 90 days.

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

FORWARD AIR P  vs.  Sixt Leasing SE

FORWARD AIR P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FORWARD AIR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, FORWARD AIR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sixt Leasing SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sixt Leasing SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sixt Leasing is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FORWARD AIR and Sixt Leasing

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

The idea behind FORWARD AIR P and Sixt Leasing SE 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.