Correlation Between Plexus Corp and FORWARD AIR

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

By analyzing existing cross correlation between Plexus Corp and FORWARD AIR P, you can compare the effects of market volatilities on Plexus Corp and FORWARD AIR 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 Plexus Corp with a short position of FORWARD AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plexus Corp and FORWARD AIR.

Diversification Opportunities for Plexus Corp and FORWARD AIR

0.65

Correlation Coefficient

Plexus Corp  FORWARD AIR

Poor diversification

The 3 months correlation between Plexus and FORWARD is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Plexus Corp and FORWARD AIR P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORWARD AIR P and Plexus Corp 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 Plexus Corp are associated (or correlated) with FORWARD AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORWARD AIR P has no effect on the direction of Plexus Corp i.e., Plexus Corp and FORWARD AIR go up and down completely randomly.

Pair Corralation between Plexus Corp and FORWARD AIR

Assuming the 90 days horizon Plexus Corp is expected to generate 0.42 times more return on investment than FORWARD AIR. However, Plexus Corp is 2.4 times less risky than FORWARD AIR. It trades about 0.05 of its potential returns per unit of risk. FORWARD AIR P is currently generating about -0.04 per unit of risk. If you would invest  8,900  in Plexus Corp on December 2, 2024 and sell it today you would earn a total of  3,700  from holding Plexus Corp or generate 41.57% return on investment over 90 days.

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

Plexus Corp  vs.  FORWARD AIR P

Plexus Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Plexus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

FORWARD AIR P

Risk-Adjusted Performance

Very Weak

Over the last 90 days FORWARD AIR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Plexus Corp and FORWARD AIR

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

The idea behind Plexus Corp and FORWARD AIR P 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.