Correlation Between Old Dominion and Mayfair Gold

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

Diversification Opportunities for Old Dominion and Mayfair Gold

0.07

Correlation Coefficient

Old Dominion  Mayfair Gold

Significant diversification

The 3 months correlation between Old and Mayfair is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight and Mayfair Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayfair Gold Corp 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 Mayfair Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayfair Gold Corp has no effect on the direction of Old Dominion i.e., Old Dominion and Mayfair Gold go up and down completely randomly.

Pair Corralation between Old Dominion and Mayfair Gold

Given the investment horizon of 90 days Old Dominion Freight is expected to generate 1.23 times more return on investment than Mayfair Gold. However, Old Dominion is 1.23 times more volatile than Mayfair Gold Corp. It trades about -0.21 of its potential returns per unit of risk. Mayfair Gold Corp is currently generating about -0.26 per unit of risk. If you would invest  21,374  in Old Dominion Freight on September 18, 2024 and sell it today you would lose (1,476) from holding Old Dominion Freight or give up 6.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Old Dominion Freight  vs.  Mayfair Gold Corp

Old Dominion Freight

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Old Dominion Freight are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Mayfair Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Old Dominion and Mayfair Gold

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

The idea behind Old Dominion Freight and Mayfair Gold Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.