Correlation Between Knight Transportation and Heartland Express

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

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

Diversification Opportunities for Knight Transportation and Heartland Express

0.83

Correlation Coefficient

Knight Transportation  Heartland Express

Very poor diversification

The 3 months correlation between Knight and Heartland is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Knight Transportation and Heartland Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Express and Knight Transportation 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 Knight Transportation are associated (or correlated) with Heartland Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Express has no effect on the direction of Knight Transportation i.e., Knight Transportation and Heartland Express go up and down completely randomly.

Pair Corralation between Knight Transportation and Heartland Express

Considering the 90-day investment horizon Knight Transportation is expected to generate 0.88 times more return on investment than Heartland Express. However, Knight Transportation is 1.14 times less risky than Heartland Express. It trades about 0.03 of its potential returns per unit of risk. Heartland Express is currently generating about 0.01 per unit of risk. If you would invest  4,020  in Knight Transportation on May 6, 2025 and sell it today you would earn a total of  109.00  from holding Knight Transportation or generate 2.71% return on investment over 90 days.

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

Knight Transportation  vs.  Heartland Express

Knight Transportation

Risk-Adjusted Performance

Weak

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

Heartland Express

Risk-Adjusted Performance

Very Weak

Over the last 90 days Heartland Express has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Heartland Express is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Knight Transportation and Heartland Express

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

The idea behind Knight Transportation and Heartland Express 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.

Check out your portfolio center.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.