Correlation Between Forsys Metals and Old Dominion

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

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

Diversification Opportunities for Forsys Metals and Old Dominion

-0.15

Correlation Coefficient

Forsys Metals  Old Dominion

Good diversification

The 3 months correlation between Forsys and Old is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Forsys Metals Corp 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 Forsys Metals 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 Forsys Metals Corp 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 Forsys Metals i.e., Forsys Metals and Old Dominion go up and down completely randomly.

Pair Corralation between Forsys Metals and Old Dominion

Assuming the 90 days horizon Forsys Metals Corp is expected to under-perform the Old Dominion. In addition to that, Forsys Metals is 1.92 times more volatile than Old Dominion Freight. It trades about -0.11 of its total potential returns per unit of risk. Old Dominion Freight is currently generating about -0.05 per unit of volatility. If you would invest  19,840  in Old Dominion Freight on September 28, 2024 and sell it today you would lose (1,696) from holding Old Dominion Freight or give up 8.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Forsys Metals Corp  vs.  Old Dominion Freight

Forsys Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forsys Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 Forsys Metals and Old Dominion

The main advantage of trading using opposite Forsys Metals and Old Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forsys Metals 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 Forsys Metals Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.