Correlation Between Hub and CH Robinson

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

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

Diversification Opportunities for Hub and CH Robinson

0.23

Correlation Coefficient

Hub  CH Robinson

Modest diversification

The 3 months correlation between Hub and CHRW is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hub Group and CH Robinson Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CH Robinson Worldwide and Hub 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 Hub Group are associated (or correlated) with CH Robinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CH Robinson Worldwide has no effect on the direction of Hub i.e., Hub and CH Robinson go up and down completely randomly.

Pair Corralation between Hub and CH Robinson

Given the investment horizon of 90 days Hub Group is expected to generate 1.41 times more return on investment than CH Robinson. However, Hub is 1.41 times more volatile than CH Robinson Worldwide. It trades about 0.11 of its potential returns per unit of risk. CH Robinson Worldwide is currently generating about 0.03 per unit of risk. If you would invest  4,578  in Hub Group on August 31, 2024 and sell it today you would earn a total of  591.00  from holding Hub Group or generate 12.91% return on investment over 90 days.

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

Hub Group  vs.  CH Robinson Worldwide

Hub Group

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hub Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental drivers, Hub reported solid returns over the last few months and may actually be approaching a breakup point.

CH Robinson Worldwide

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CH Robinson Worldwide are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, CH Robinson is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Hub and CH Robinson

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

The idea behind Hub Group and CH Robinson Worldwide 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.