Correlation Between Initio and Old Dominion

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

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

Diversification Opportunities for Initio and Old Dominion

0.0

Correlation Coefficient

Initio  Old Dominion

Pay attention - limited upside

The 3 months correlation between Initio and Old is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Initio 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 Initio 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 Initio 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 Initio i.e., Initio and Old Dominion go up and down completely randomly.

Pair Corralation between Initio and Old Dominion

If you would invest  15,632  in Old Dominion Freight on October 9, 2024 and sell it today you would earn a total of  2,635  from holding Old Dominion Freight or generate 16.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Initio Inc  vs.  Old Dominion Freight

Initio Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Initio Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Initio is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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 Initio and Old Dominion

The main advantage of trading using opposite Initio and Old Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Initio 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 Initio 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.