Correlation Between Old Dominion and Daseke

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

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

Diversification Opportunities for Old Dominion and Daseke

0.57

Correlation Coefficient

Old Dominion  Daseke

Very weak diversification

The 3 months correlation between Old and Daseke is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight and Daseke Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daseke Inc and Old Dominion 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 Old Dominion Freight are associated (or correlated) with Daseke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daseke Inc has no effect on the direction of Old Dominion i.e., Old Dominion and Daseke go up and down completely randomly.

Pair Corralation between Old Dominion and Daseke

Given the investment horizon of 90 days Old Dominion Freight is expected to generate 0.51 times more return on investment than Daseke. However, Old Dominion Freight is 1.96 times less risky than Daseke. It trades about 0.04 of its potential returns per unit of risk. Daseke Inc is currently generating about 0.02 per unit of risk. If you would invest  13,894  in Old Dominion Freight on January 26, 2024 and sell it today you would earn a total of  5,612  from holding Old Dominion Freight or generate 40.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.76%
Values	Daily Returns

Old Dominion Freight  vs.  Daseke Inc

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 quite persistent technical and fundamental indicators, Old Dominion is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Daseke Inc

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Daseke Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Daseke is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Old Dominion and Daseke

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

The idea behind Old Dominion Freight and Daseke Inc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.