Correlation Between Marten Transport and Covenant Logistics

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

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

Diversification Opportunities for Marten Transport and Covenant Logistics

0.29

Correlation Coefficient

Marten Transport  Covenant Logistics

Modest diversification

The 3 months correlation between Marten and Covenant is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Marten Transport and Covenant Logistics Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covenant Logistics Group, and Marten Transport 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 Marten Transport are associated (or correlated) with Covenant Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covenant Logistics Group, has no effect on the direction of Marten Transport i.e., Marten Transport and Covenant Logistics go up and down completely randomly.

Pair Corralation between Marten Transport and Covenant Logistics

Given the investment horizon of 90 days Marten Transport is expected to under-perform the Covenant Logistics. But the stock apears to be less risky and, when comparing its historical volatility, Marten Transport is 1.46 times less risky than Covenant Logistics. The stock trades about -0.27 of its potential returns per unit of risk. The Covenant Logistics Group, is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  2,501  in Covenant Logistics Group, on May 7, 2025 and sell it today you would lose (97.00) from holding Covenant Logistics Group, or give up 3.88% of portfolio value over 90 days.

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

Marten Transport  vs.  Covenant Logistics Group,

Marten Transport

Risk-Adjusted Performance

Weakest

Over the last 90 days Marten Transport has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Marten Transport is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Covenant Logistics Group,

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Covenant Logistics Group, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady essential indicators, Covenant Logistics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marten Transport and Covenant Logistics

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

The idea behind Marten Transport and Covenant Logistics Group, 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.