Correlation Between Patriot Transportation and Heartland Express

Can any of the company-specific risk be diversified away by investing in both Patriot Transportation and Heartland Express 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 Patriot Transportation and Heartland Express into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Patriot Transportation Holding and Heartland Express, you can compare the effects of market volatilities on Patriot Transportation and Heartland Express 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 Patriot Transportation with a short position of Heartland Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patriot Transportation and Heartland Express.

Diversification Opportunities for Patriot Transportation and Heartland Express

0.04

Correlation Coefficient

Patriot Transportation  Heartland Express

Significant diversification

The 3 months correlation between Patriot and Heartland is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Patriot Transportation Holding and Heartland Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Express and Patriot Transportation 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 Patriot Transportation Holding are associated (or correlated) with Heartland Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Express has no effect on the direction of Patriot Transportation i.e., Patriot Transportation and Heartland Express go up and down completely randomly.

Pair Corralation between Patriot Transportation and Heartland Express

If you would invest  1,230  in Heartland Express on August 31, 2024 and sell it today you would earn a total of  26.00  from holding Heartland Express or generate 2.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Patriot Transportation Holding  vs.  Heartland Express

Patriot Transportation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Patriot Transportation Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Patriot Transportation is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Heartland Express

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Heartland Express are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Heartland Express is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Patriot Transportation and Heartland Express

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

The idea behind Patriot Transportation Holding and Heartland Express 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.