Correlation Between Cool and ArcBest Corp

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

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

Diversification Opportunities for Cool and ArcBest Corp

0.59

Correlation Coefficient

Cool  ArcBest Corp

Very weak diversification

The 3 months correlation between Cool and ArcBest is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cool Company and ArcBest Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcBest Corp and Cool 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 Cool Company 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 Cool i.e., Cool and ArcBest Corp go up and down completely randomly.

Pair Corralation between Cool and ArcBest Corp

Given the investment horizon of 90 days Cool is expected to generate 1.12 times less return on investment than ArcBest Corp. But when comparing it to its historical volatility, Cool Company is 1.59 times less risky than ArcBest Corp. It trades about 0.17 of its potential returns per unit of risk. ArcBest Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5,882  in ArcBest Corp on May 7, 2025 and sell it today you would earn a total of  1,449  from holding ArcBest Corp or generate 24.63% return on investment over 90 days.

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

Cool Company  vs.  ArcBest Corp

Cool Company

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cool Company are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, Cool displayed solid returns over the last few months and may actually be approaching a breakup point.

ArcBest Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ArcBest Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, ArcBest Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cool and ArcBest Corp

The main advantage of trading using opposite Cool and ArcBest Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cool 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 Cool Company 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.