Correlation Between Old Dominion and Canlan Ice

Can any of the company-specific risk be diversified away by investing in both Old Dominion and Canlan Ice 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 Canlan Ice 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 Canlan Ice Sports, you can compare the effects of market volatilities on Old Dominion and Canlan Ice 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 Canlan Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Dominion and Canlan Ice.

Diversification Opportunities for Old Dominion and Canlan Ice

0.11

Correlation Coefficient

Old Dominion  Canlan Ice

Average diversification

The 3 months correlation between Old and Canlan is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight and Canlan Ice Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canlan Ice Sports 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 Canlan Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canlan Ice Sports has no effect on the direction of Old Dominion i.e., Old Dominion and Canlan Ice go up and down completely randomly.

Pair Corralation between Old Dominion and Canlan Ice

Given the investment horizon of 90 days Old Dominion Freight is expected to under-perform the Canlan Ice. In addition to that, Old Dominion is 20.51 times more volatile than Canlan Ice Sports. It trades about 0.0 of its total potential returns per unit of risk. Canlan Ice Sports is currently generating about 0.13 per unit of volatility. If you would invest  286.00  in Canlan Ice Sports on October 1, 2024 and sell it today you would earn a total of  11.00  from holding Canlan Ice Sports or generate 3.85% return on investment over 90 days.

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

Old Dominion Freight  vs.  Canlan Ice Sports

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.

Canlan Ice Sports

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canlan Ice Sports has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Canlan Ice is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Old Dominion and Canlan Ice

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

The idea behind Old Dominion Freight and Canlan Ice Sports 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.