Correlation Between RXO and Marten Transport

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

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

Diversification Opportunities for RXO and Marten Transport

-0.04

Correlation Coefficient

RXO  Marten Transport

Good diversification

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

Pair Corralation between RXO and Marten Transport

Considering the 90-day investment horizon RXO is expected to generate 1.02 times less return on investment than Marten Transport. In addition to that, RXO is 1.79 times more volatile than Marten Transport. It trades about 0.1 of its total potential returns per unit of risk. Marten Transport is currently generating about 0.19 per unit of volatility. If you would invest  1,586  in Marten Transport on September 2, 2024 and sell it today you would earn a total of  152.00  from holding Marten Transport or generate 9.58% return on investment over 90 days.

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

RXO Inc  vs.  Marten Transport

RXO Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RXO Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, RXO may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Marten Transport

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marten Transport are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Marten Transport is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with RXO and Marten Transport

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

The idea behind RXO Inc and Marten Transport 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.