Correlation Between Old Dominion and Proficient Auto

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

Diversification Opportunities for Old Dominion and Proficient Auto

-0.45

Correlation Coefficient

Old Dominion  Proficient Auto

Very good diversification

The 3 months correlation between Old and Proficient is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight and Proficient Auto Logistics, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proficient Auto Logi 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 Proficient Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proficient Auto Logi has no effect on the direction of Old Dominion i.e., Old Dominion and Proficient Auto go up and down completely randomly.

Pair Corralation between Old Dominion and Proficient Auto

Given the investment horizon of 90 days Old Dominion Freight is expected to under-perform the Proficient Auto. But the stock apears to be less risky and, when comparing its historical volatility, Old Dominion Freight is 1.41 times less risky than Proficient Auto. The stock trades about -0.21 of its potential returns per unit of risk. The Proficient Auto Logistics, is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  954.00  in Proficient Auto Logistics, on September 18, 2024 and sell it today you would lose (57.00) from holding Proficient Auto Logistics, or give up 5.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Old Dominion Freight  vs.  Proficient Auto Logistics,

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.

Proficient Auto Logi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Proficient Auto Logistics, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Old Dominion and Proficient Auto

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

The idea behind Old Dominion Freight and Proficient Auto Logistics, 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 Commodity Directory module to find actively traded commodities issued by global exchanges.