Correlation Between Old Dominion and ESGL Holdings

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

Diversification Opportunities for Old Dominion and ESGL Holdings

0.31

Correlation Coefficient

Old Dominion  ESGL Holdings

Weak diversification

The 3 months correlation between Old and ESGL is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight and ESGL Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESGL Holdings Limited 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 ESGL Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESGL Holdings Limited has no effect on the direction of Old Dominion i.e., Old Dominion and ESGL Holdings go up and down completely randomly.

Pair Corralation between Old Dominion and ESGL Holdings

Given the investment horizon of 90 days Old Dominion Freight is expected to generate 0.21 times more return on investment than ESGL Holdings. However, Old Dominion Freight is 4.67 times less risky than ESGL Holdings. It trades about -0.01 of its potential returns per unit of risk. ESGL Holdings Limited is currently generating about -0.03 per unit of risk. If you would invest  19,755  in Old Dominion Freight on October 25, 2024 and sell it today you would lose (602.00) from holding Old Dominion Freight or give up 3.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	78.33%
Values	Daily Returns

Old Dominion Freight  vs.  ESGL Holdings Limited

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.

ESGL Holdings Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ESGL Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Old Dominion and ESGL Holdings

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

The idea behind Old Dominion Freight and ESGL Holdings Limited 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.