Correlation Between Paysafe and Old Dominion

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

By analyzing existing cross correlation between Paysafe and Old Dominion Freight, you can compare the effects of market volatilities on Paysafe and Old Dominion 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 Paysafe with a short position of Old Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paysafe and Old Dominion.

Diversification Opportunities for Paysafe and Old Dominion

0.36

Correlation Coefficient

Paysafe  Old Dominion

Weak diversification

The 3 months correlation between Paysafe and Old is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Paysafe and Old Dominion Freight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Dominion Freight and Paysafe 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 Paysafe are associated (or correlated) with Old Dominion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Dominion Freight has no effect on the direction of Paysafe i.e., Paysafe and Old Dominion go up and down completely randomly.

Pair Corralation between Paysafe and Old Dominion

Given the investment horizon of 90 days Paysafe is expected to generate 1.1 times less return on investment than Old Dominion. In addition to that, Paysafe is 1.85 times more volatile than Old Dominion Freight. It trades about 0.01 of its total potential returns per unit of risk. Old Dominion Freight is currently generating about 0.02 per unit of volatility. If you would invest  15,989  in Old Dominion Freight on October 12, 2024 and sell it today you would earn a total of  1,652  from holding Old Dominion Freight or generate 10.33% return on investment over 90 days.

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

Paysafe  vs.  Old Dominion Freight

Paysafe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paysafe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Old Dominion Freight

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Old Dominion Freight has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Paysafe and Old Dominion

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

The idea behind Paysafe and Old Dominion Freight 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.