Correlation Between Heartland Express and RXO

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

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

Diversification Opportunities for Heartland Express and RXO

0.82

Correlation Coefficient

Heartland Express  RXO

Very poor diversification

The 3 months correlation between Heartland and RXO is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Express and RXO Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RXO Inc and Heartland Express 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 Heartland Express are associated (or correlated) with RXO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RXO Inc has no effect on the direction of Heartland Express i.e., Heartland Express and RXO go up and down completely randomly.

Pair Corralation between Heartland Express and RXO

Given the investment horizon of 90 days Heartland Express is expected to generate 0.49 times more return on investment than RXO. However, Heartland Express is 2.05 times less risky than RXO. It trades about -0.21 of its potential returns per unit of risk. RXO Inc is currently generating about -0.26 per unit of risk. If you would invest  1,140  in Heartland Express on December 1, 2024 and sell it today you would lose (108.00) from holding Heartland Express or give up 9.47% of portfolio value over 90 days.

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

Heartland Express  vs.  RXO Inc

Heartland Express

Risk-Adjusted Performance

Very Weak

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

RXO Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days RXO Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Heartland Express and RXO

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

The idea behind Heartland Express and RXO Inc 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.