Correlation Between Fluent and Old Dominion

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

By analyzing existing cross correlation between Fluent Inc and Old Dominion Freight, you can compare the effects of market volatilities on Fluent and Old Dominion 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 Fluent with a short position of Old Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fluent and Old Dominion.

Diversification Opportunities for Fluent and Old Dominion

0.8

Correlation Coefficient

Fluent  Old Dominion

Very poor diversification

The 3 months correlation between Fluent and Old is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fluent Inc and Old Dominion Freight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Dominion Freight and Fluent 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 Fluent Inc are associated (or correlated) with Old Dominion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Dominion Freight has no effect on the direction of Fluent i.e., Fluent and Old Dominion go up and down completely randomly.

Pair Corralation between Fluent and Old Dominion

Given the investment horizon of 90 days Fluent Inc is expected to under-perform the Old Dominion. In addition to that, Fluent is 1.74 times more volatile than Old Dominion Freight. It trades about -0.06 of its total potential returns per unit of risk. Old Dominion Freight is currently generating about -0.04 per unit of volatility. If you would invest  17,994  in Old Dominion Freight on December 27, 2024 and sell it today you would lose (1,127) from holding Old Dominion Freight or give up 6.26% of portfolio value over 90 days.

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

Fluent Inc  vs.  Old Dominion Freight

Fluent Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fluent Inc 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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Old Dominion Freight

Risk-Adjusted Performance

Very Weak

Over the last 90 days Old Dominion Freight has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Old Dominion is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Fluent and Old Dominion

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

The idea behind Fluent Inc and Old Dominion Freight 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.