Correlation Between SCHNEIDER NATLINC and Covenant Logistics

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

By analyzing existing cross correlation between SCHNEIDER NATLINC CLB and Covenant Logistics Group, you can compare the effects of market volatilities on SCHNEIDER NATLINC and Covenant 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 SCHNEIDER NATLINC with a short position of Covenant Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCHNEIDER NATLINC and Covenant Logistics.

Diversification Opportunities for SCHNEIDER NATLINC and Covenant Logistics

0.94

Correlation Coefficient

SCHNEIDER NATLINC  Covenant Logistics

Almost no diversification

The 3 months correlation between SCHNEIDER and Covenant is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding SCHNEIDER NATLINC CLB and Covenant Logistics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covenant Logistics and SCHNEIDER NATLINC 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 SCHNEIDER NATLINC CLB are associated (or correlated) with Covenant Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covenant Logistics has no effect on the direction of SCHNEIDER NATLINC i.e., SCHNEIDER NATLINC and Covenant Logistics go up and down completely randomly.

Pair Corralation between SCHNEIDER NATLINC and Covenant Logistics

Assuming the 90 days trading horizon SCHNEIDER NATLINC is expected to generate 1.1 times less return on investment than Covenant Logistics. But when comparing it to its historical volatility, SCHNEIDER NATLINC CLB is 1.09 times less risky than Covenant Logistics. It trades about 0.1 of its potential returns per unit of risk. Covenant Logistics Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,710  in Covenant Logistics Group on October 1, 2024 and sell it today you would earn a total of  590.00  from holding Covenant Logistics Group or generate 12.53% return on investment over 90 days.

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

SCHNEIDER NATLINC CLB  vs.  Covenant Logistics Group

SCHNEIDER NATLINC CLB

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCHNEIDER NATLINC CLB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, SCHNEIDER NATLINC may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Covenant Logistics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Covenant Logistics Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Covenant Logistics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SCHNEIDER NATLINC and Covenant Logistics

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

The idea behind SCHNEIDER NATLINC CLB and Covenant Logistics Group 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.