Correlation Between US Xpress and Schneider National

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

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

Diversification Opportunities for US Xpress and Schneider National

0.78

Correlation Coefficient

US Xpress  Schneider National

Poor diversification

The 3 months correlation between USX and Schneider is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding US Xpress Enterprises and Schneider National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider National and US Xpress 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 US Xpress Enterprises 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 US Xpress i.e., US Xpress and Schneider National go up and down completely randomly.

Pair Corralation between US Xpress and Schneider National

Considering the 90-day investment horizon US Xpress Enterprises is expected to generate 14.66 times more return on investment than Schneider National. However, US Xpress is 14.66 times more volatile than Schneider National. It trades about 0.08 of its potential returns per unit of risk. Schneider National is currently generating about 0.04 per unit of risk. If you would invest  216.00  in US Xpress Enterprises on August 24, 2024 and sell it today you would earn a total of  398.00  from holding US Xpress Enterprises or generate 184.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	29.03%
Values	Daily Returns

US Xpress Enterprises  vs.  Schneider National

US Xpress Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US Xpress Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, US Xpress is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 US Xpress and Schneider National

The main advantage of trading using opposite US Xpress and Schneider National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Xpress 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 US Xpress Enterprises 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.