Correlation Between Old Dominion and Hawkins
Can any of the company-specific risk be diversified away by investing in both Old Dominion and Hawkins 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 Hawkins 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 Hawkins, you can compare the effects of market volatilities on Old Dominion and Hawkins 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 Hawkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Dominion and Hawkins.
Diversification Opportunities for Old Dominion and Hawkins
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Old and Hawkins is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of Old Dominion i.e., Old Dominion and Hawkins go up and down completely randomly.
Pair Corralation between Old Dominion and Hawkins
Given the investment horizon of 90 days Old Dominion Freight is expected to generate 0.89 times more return on investment than Hawkins. However, Old Dominion Freight is 1.13 times less risky than Hawkins. It trades about -0.04 of its potential returns per unit of risk. Hawkins is currently generating about -0.1 per unit of risk. If you would invest 17,994 in Old Dominion Freight on December 27, 2024 and sell it today you would lose (1,127) from holding Old Dominion Freight or give up 6.26% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Old Dominion Freight vs. Hawkins
Performance |
Timeline |
Old Dominion Freight |
Hawkins |
Old Dominion and Hawkins Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Old Dominion and Hawkins
The main advantage of trading using opposite Old Dominion and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Dominion position performs unexpectedly, Hawkins 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 Hawkins will offset losses from the drop in Hawkins' long position.Old Dominion vs. ArcBest Corp | Old Dominion vs. Marten Transport | Old Dominion vs. Werner Enterprises | Old Dominion vs. Knight Transportation |
Hawkins vs. H B Fuller | Hawkins vs. Minerals Technologies | Hawkins vs. Quaker Chemical | Hawkins vs. Oil Dri |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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