Correlation Between Viking Holdings and Old Dominion

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

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

Diversification Opportunities for Viking Holdings and Old Dominion

0.31

Correlation Coefficient

Viking Holdings  Old Dominion

Weak diversification

The 3 months correlation between Viking and Old is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Viking Holdings 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 Viking Holdings 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 Viking Holdings 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 Viking Holdings i.e., Viking Holdings and Old Dominion go up and down completely randomly.

Pair Corralation between Viking Holdings and Old Dominion

Considering the 90-day investment horizon Viking Holdings is expected to generate 1.59 times more return on investment than Old Dominion. However, Viking Holdings is 1.59 times more volatile than Old Dominion Freight. It trades about -0.06 of its potential returns per unit of risk. Old Dominion Freight is currently generating about -0.44 per unit of risk. If you would invest  4,459  in Viking Holdings on October 11, 2024 and sell it today you would lose (154.00) from holding Viking Holdings or give up 3.45% of portfolio value over 90 days.

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

Viking Holdings  vs.  Old Dominion Freight

Viking Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Viking Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward indicators, Viking Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 Viking Holdings and Old Dominion

The main advantage of trading using opposite Viking Holdings and Old Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viking Holdings 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 Viking Holdings 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.