Correlation Between Hub and Landstar System

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

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

Diversification Opportunities for Hub and Landstar System

0.92

Correlation Coefficient

Hub  Landstar System

Almost no diversification

The 3 months correlation between Hub and Landstar is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Hub Group and Landstar System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Landstar System and Hub 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 Hub Group are associated (or correlated) with Landstar System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Landstar System has no effect on the direction of Hub i.e., Hub and Landstar System go up and down completely randomly.

Pair Corralation between Hub and Landstar System

Given the investment horizon of 90 days Hub Group is expected to under-perform the Landstar System. In addition to that, Hub is 1.11 times more volatile than Landstar System. It trades about -0.16 of its total potential returns per unit of risk. Landstar System is currently generating about -0.15 per unit of volatility. If you would invest  17,005  in Landstar System on December 28, 2024 and sell it today you would lose (2,268) from holding Landstar System or give up 13.34% of portfolio value over 90 days.

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

Hub Group  vs.  Landstar System

Hub Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hub Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Landstar System

Risk-Adjusted Performance

Very Weak

Over the last 90 days Landstar System has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Hub and Landstar System

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

The idea behind Hub Group and Landstar System 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.