Correlation Between Independence Contract and Old Dominion

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

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

Diversification Opportunities for Independence Contract and Old Dominion

0.67

Correlation Coefficient

Independence Contract  Old Dominion

Poor diversification

The 3 months correlation between Independence and Old is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Independence Contract Drilling 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 Independence Contract 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 Independence Contract Drilling, 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 Independence Contract i.e., Independence Contract and Old Dominion go up and down completely randomly.

Pair Corralation between Independence Contract and Old Dominion

If you would invest  34.00  in Independence Contract Drilling, on October 25, 2024 and sell it today you would earn a total of  0.00  from holding Independence Contract Drilling, or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.69%
Values	Daily Returns

Independence Contract Drilling  vs.  Old Dominion Freight

Independence Contract

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Independence Contract Drilling, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Independence Contract is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Old Dominion Freight

Risk-Adjusted Performance

0 of 100

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 Independence Contract and Old Dominion

The main advantage of trading using opposite Independence Contract and Old Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Independence Contract 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 Independence Contract Drilling, 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.