Correlation Between Patriot Transportation and Knight Transportation

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

Diversification Opportunities for Patriot Transportation and Knight Transportation

0.0

Correlation Coefficient

Patriot Transportation  Knight Transportation

Pay attention - limited upside

The 3 months correlation between Patriot and Knight is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Patriot Transportation Holding and Knight Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knight Transportation 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 Knight Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knight Transportation has no effect on the direction of Patriot Transportation i.e., Patriot Transportation and Knight Transportation go up and down completely randomly.

Pair Corralation between Patriot Transportation and Knight Transportation

If you would invest (100.00) in Patriot Transportation Holding on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Patriot Transportation Holding or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Patriot Transportation Holding  vs.  Knight Transportation

Patriot Transportation

Risk-Adjusted Performance

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.

Knight Transportation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Knight Transportation 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 basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Patriot Transportation and Knight Transportation

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

The idea behind Patriot Transportation Holding and Knight Transportation 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.