Correlation Between Patriot Transportation and Universal Logistics

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

Diversification Opportunities for Patriot Transportation and Universal Logistics

-0.7

Correlation Coefficient

Patriot Transportation  Universal Logistics

Excellent diversification

The 3 months correlation between Patriot and Universal is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Patriot Transportation Holding and Universal Logistics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Logistics 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 Universal Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Logistics has no effect on the direction of Patriot Transportation i.e., Patriot Transportation and Universal Logistics go up and down completely randomly.

Pair Corralation between Patriot Transportation and Universal Logistics

If you would invest  4,178  in Universal Logistics Holdings on August 31, 2024 and sell it today you would earn a total of  945.00  from holding Universal Logistics Holdings or generate 22.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Patriot Transportation Holding  vs.  Universal Logistics Holdings

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.

Universal Logistics

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Logistics Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent essential indicators, Universal Logistics demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Patriot Transportation and Universal Logistics

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

The idea behind Patriot Transportation Holding and Universal Logistics Holdings 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 Stocks Directory module to find actively traded stocks across global markets.