Correlation Between Covenant Logistics and Schneider National

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

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

Diversification Opportunities for Covenant Logistics and Schneider National

0.88

Correlation Coefficient

Covenant Logistics  Schneider National

Very poor diversification

The 3 months correlation between Covenant and Schneider is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Covenant Logistics Group, and Schneider National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider National and Covenant Logistics 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 Covenant Logistics Group, are associated (or correlated) with Schneider National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schneider National has no effect on the direction of Covenant Logistics i.e., Covenant Logistics and Schneider National go up and down completely randomly.

Pair Corralation between Covenant Logistics and Schneider National

Given the investment horizon of 90 days Covenant Logistics is expected to generate 1.16 times less return on investment than Schneider National. In addition to that, Covenant Logistics is 1.84 times more volatile than Schneider National. It trades about 0.18 of its total potential returns per unit of risk. Schneider National is currently generating about 0.39 per unit of volatility. If you would invest  2,784  in Schneider National on August 24, 2024 and sell it today you would earn a total of  377.00  from holding Schneider National or generate 13.54% return on investment over 90 days.

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

Covenant Logistics Group,  vs.  Schneider National

Covenant Logistics Group,

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Covenant Logistics Group, are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating essential indicators, Covenant Logistics may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Schneider National

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Schneider National are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, Schneider National reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Covenant Logistics and Schneider National

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

The idea behind Covenant Logistics Group, and Schneider National 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.