Correlation Between Old Dominion and Afya
Can any of the company-specific risk be diversified away by investing in both Old Dominion and Afya 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 Old Dominion and Afya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Dominion Freight and Afya, you can compare the effects of market volatilities on Old Dominion and Afya 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 Old Dominion with a short position of Afya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Dominion and Afya.
Diversification Opportunities for Old Dominion and Afya
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Old and Afya is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya and Old Dominion 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 Old Dominion Freight are associated (or correlated) with Afya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afya has no effect on the direction of Old Dominion i.e., Old Dominion and Afya go up and down completely randomly.
Pair Corralation between Old Dominion and Afya
Given the investment horizon of 90 days Old Dominion Freight is expected to under-perform the Afya. In addition to that, Old Dominion is 1.07 times more volatile than Afya. It trades about -0.15 of its total potential returns per unit of risk. Afya is currently generating about 0.02 per unit of volatility. If you would invest 1,618 in Afya on December 4, 2024 and sell it today you would earn a total of 27.00 from holding Afya or generate 1.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Old Dominion Freight vs. Afya
Performance |
Timeline |
Old Dominion Freight |
Afya |
Old Dominion and Afya Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Old Dominion and Afya
The main advantage of trading using opposite Old Dominion and Afya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Dominion position performs unexpectedly, Afya 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 Afya will offset losses from the drop in Afya's long position.Old Dominion vs. ArcBest Corp | Old Dominion vs. Marten Transport | Old Dominion vs. Werner Enterprises | Old Dominion vs. Knight Transportation |
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Check out your portfolio center.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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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