Correlation Between FORWARD AIR and OVERSEA CHINUNSPADR2

Can any of the company-specific risk be diversified away by investing in both FORWARD AIR and OVERSEA CHINUNSPADR2 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 OVERSEA CHINUNSPADR2 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 OVERSEA CHINUNSPADR2, you can compare the effects of market volatilities on FORWARD AIR and OVERSEA CHINUNSPADR2 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 OVERSEA CHINUNSPADR2. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORWARD AIR and OVERSEA CHINUNSPADR2.

Diversification Opportunities for FORWARD AIR and OVERSEA CHINUNSPADR2

-0.43

Correlation Coefficient

FORWARD AIR  OVERSEA CHINUNSPADR2

Very good diversification

The 3 months correlation between FORWARD and OVERSEA is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding FORWARD AIR P and OVERSEA CHINUNSPADR2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OVERSEA CHINUNSPADR2 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 OVERSEA CHINUNSPADR2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OVERSEA CHINUNSPADR2 has no effect on the direction of FORWARD AIR i.e., FORWARD AIR and OVERSEA CHINUNSPADR2 go up and down completely randomly.

Pair Corralation between FORWARD AIR and OVERSEA CHINUNSPADR2

Assuming the 90 days horizon FORWARD AIR P is expected to generate 2.22 times more return on investment than OVERSEA CHINUNSPADR2. However, FORWARD AIR is 2.22 times more volatile than OVERSEA CHINUNSPADR2. It trades about 0.17 of its potential returns per unit of risk. OVERSEA CHINUNSPADR2 is currently generating about 0.17 per unit of risk. If you would invest  2,880  in FORWARD AIR P on October 27, 2024 and sell it today you would earn a total of  280.00  from holding FORWARD AIR P or generate 9.72% return on investment over 90 days.

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

FORWARD AIR P  vs.  OVERSEA CHINUNSPADR2

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.

OVERSEA CHINUNSPADR2

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OVERSEA CHINUNSPADR2 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental drivers, OVERSEA CHINUNSPADR2 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FORWARD AIR and OVERSEA CHINUNSPADR2

The main advantage of trading using opposite FORWARD AIR and OVERSEA CHINUNSPADR2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FORWARD AIR position performs unexpectedly, OVERSEA CHINUNSPADR2 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 OVERSEA CHINUNSPADR2 will offset losses from the drop in OVERSEA CHINUNSPADR2's long position.

The idea behind FORWARD AIR P and OVERSEA CHINUNSPADR2 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 CEOs Directory module to screen CEOs from public companies around the world.