Correlation Between Danaos and ArcBest Corp

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

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

Diversification Opportunities for Danaos and ArcBest Corp

0.82

Correlation Coefficient

Danaos  ArcBest Corp

Very poor diversification

The 3 months correlation between Danaos and ArcBest is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Danaos and ArcBest Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcBest Corp and Danaos 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 Danaos 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 Danaos i.e., Danaos and ArcBest Corp go up and down completely randomly.

Pair Corralation between Danaos and ArcBest Corp

Considering the 90-day investment horizon Danaos is expected to generate 1.72 times less return on investment than ArcBest Corp. But when comparing it to its historical volatility, Danaos is 2.41 times less risky than ArcBest Corp. It trades about 0.16 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	Strong
Accuracy	100.0%
Values	Daily Returns

Danaos  vs.  ArcBest Corp

Danaos

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Danaos are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Danaos exhibited 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 Danaos and ArcBest Corp

The main advantage of trading using opposite Danaos and ArcBest Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danaos 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 Danaos 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.