Correlation Between ConAgra Foods and Old Dominion

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Can any of the company-specific risk be diversified away by investing in both ConAgra Foods 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 ConAgra Foods and Old Dominion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConAgra Foods and Old Dominion Freight, you can compare the effects of market volatilities on ConAgra Foods 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 ConAgra Foods with a short position of Old Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConAgra Foods and Old Dominion.

Diversification Opportunities for ConAgra Foods and Old Dominion

-0.62
  Correlation Coefficient

Excellent diversification

The 3 months correlation between ConAgra and Old is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding ConAgra Foods 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 ConAgra Foods 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 ConAgra Foods 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 ConAgra Foods i.e., ConAgra Foods and Old Dominion go up and down completely randomly.

Pair Corralation between ConAgra Foods and Old Dominion

Considering the 90-day investment horizon ConAgra Foods is expected to under-perform the Old Dominion. In addition to that, ConAgra Foods is 1.16 times more volatile than Old Dominion Freight. It trades about -0.05 of its total potential returns per unit of risk. Old Dominion Freight is currently generating about 0.24 per unit of volatility. If you would invest  39,424  in Old Dominion Freight on November 24, 2023 and sell it today you would earn a total of  3,018  from holding Old Dominion Freight or generate 7.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

ConAgra Foods  vs.  Old Dominion Freight

 Performance 
       Timeline  
ConAgra Foods 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days ConAgra Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ConAgra Foods is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
Old Dominion Freight 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Old Dominion Freight are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Old Dominion is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

ConAgra Foods and Old Dominion Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ConAgra Foods and Old Dominion

The main advantage of trading using opposite ConAgra Foods and Old Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConAgra Foods 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 ConAgra Foods 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.
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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