Correlation Between High Tide and Transportation

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

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

Diversification Opportunities for High Tide and Transportation

0.35

Correlation Coefficient

High Tide  Transportation

Weak diversification

The 3 months correlation between High and Transportation is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding High Tide and Transportation and Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportation and High Tide 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 High Tide are associated (or correlated) with Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportation has no effect on the direction of High Tide i.e., High Tide and Transportation go up and down completely randomly.

Pair Corralation between High Tide and Transportation

Given the investment horizon of 90 days High Tide is expected to under-perform the Transportation. But the stock apears to be less risky and, when comparing its historical volatility, High Tide is 24.43 times less risky than Transportation. The stock trades about -0.06 of its potential returns per unit of risk. The Transportation and Logistics is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Transportation and Logistics on May 4, 2025 and sell it today you would lose (0.01) from holding Transportation and Logistics or give up 33.33% of portfolio value over 90 days.

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

High Tide  vs.  Transportation and Logistics

High Tide

Risk-Adjusted Performance

Very Weak

Over the last 90 days High Tide has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Transportation

Risk-Adjusted Performance

Good

Over the last 90 days Transportation and Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Transportation unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with High Tide and Transportation

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

The idea behind High Tide and Transportation and Logistics 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.