Correlation Between Yellow Corp and ArcBest Corp

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

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

Diversification Opportunities for Yellow Corp and ArcBest Corp

-0.27

Correlation Coefficient

Yellow Corp  ArcBest Corp

Very good diversification

The 3 months correlation between Yellow and ArcBest is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Yellow Corp and ArcBest Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcBest Corp and Yellow 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 Yellow Corp are associated (or correlated) with ArcBest Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcBest Corp has no effect on the direction of Yellow Corp i.e., Yellow Corp and ArcBest Corp go up and down completely randomly.

Pair Corralation between Yellow Corp and ArcBest Corp

If you would invest  10,372  in ArcBest Corp on September 13, 2024 and sell it today you would earn a total of  767.00  from holding ArcBest Corp or generate 7.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Yellow Corp  vs.  ArcBest Corp

Yellow Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yellow Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Yellow Corp is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

ArcBest Corp

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ArcBest Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental indicators, ArcBest Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Yellow Corp and ArcBest Corp

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

The idea behind Yellow Corp and ArcBest Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .