Correlation Between Forward Air and Expeditors International

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

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

Diversification Opportunities for Forward Air and Expeditors International

0.33

Correlation Coefficient

Forward Air  Expeditors International

Weak diversification

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

Pair Corralation between Forward Air and Expeditors International

Given the investment horizon of 90 days Forward Air is expected to under-perform the Expeditors International. In addition to that, Forward Air is 2.49 times more volatile than Expeditors International of. It trades about -0.18 of its total potential returns per unit of risk. Expeditors International of is currently generating about -0.02 per unit of volatility. 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

Forward Air  vs.  Expeditors International of

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.

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.

Pair Trading with Forward Air and Expeditors International

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

The idea behind Forward Air and Expeditors International of 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.