Correlation Between Expeditors International and CH Robinson

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

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

Diversification Opportunities for Expeditors International and CH Robinson

0.09

Correlation Coefficient

Expeditors International  CH Robinson

Significant diversification

The 3 months correlation between Expeditors and CHRW is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Expeditors International of and CH Robinson Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CH Robinson Worldwide and Expeditors International 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 Expeditors International of are associated (or correlated) with CH Robinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CH Robinson Worldwide has no effect on the direction of Expeditors International i.e., Expeditors International and CH Robinson go up and down completely randomly.

Pair Corralation between Expeditors International and CH Robinson

Given the investment horizon of 90 days Expeditors International is expected to generate 24.66 times less return on investment than CH Robinson. But when comparing it to its historical volatility, Expeditors International of is 3.18 times less risky than CH Robinson. It trades about 0.04 of its potential returns per unit of risk. CH Robinson Worldwide is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  6,901  in CH Robinson Worldwide on February 15, 2024 and sell it today you would earn a total of  1,387  from holding CH Robinson Worldwide or generate 20.1% return on investment over 90 days.

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

Expeditors International of  vs.  CH Robinson Worldwide

Expeditors International

Risk-Adjusted Performance

0 of 100

Very Weak

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

CH Robinson Worldwide

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CH Robinson Worldwide are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, CH Robinson showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Expeditors International and CH Robinson

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

The idea behind Expeditors International of and CH Robinson Worldwide 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.