Correlation Between Universal Logistics and Marten Transport

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

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

Diversification Opportunities for Universal Logistics and Marten Transport

0.01

Correlation Coefficient

Universal Logistics  Marten Transport

Significant diversification

The 3 months correlation between Universal and Marten is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Universal Logistics Holdings and Marten Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marten Transport and Universal Logistics 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 Universal Logistics Holdings are associated (or correlated) with Marten Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marten Transport has no effect on the direction of Universal Logistics i.e., Universal Logistics and Marten Transport go up and down completely randomly.

Pair Corralation between Universal Logistics and Marten Transport

Considering the 90-day investment horizon Universal Logistics is expected to generate 1.88 times less return on investment than Marten Transport. In addition to that, Universal Logistics is 3.22 times more volatile than Marten Transport. It trades about 0.02 of its total potential returns per unit of risk. Marten Transport is currently generating about 0.14 per unit of volatility. If you would invest  1,701  in Marten Transport on March 2, 2024 and sell it today you would earn a total of  41.00  from holding Marten Transport or generate 2.41% return on investment over 90 days.

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

Universal Logistics Holdings  vs.  Marten Transport

Universal Logistics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Logistics Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent essential indicators, Universal Logistics demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Marten Transport

Risk-Adjusted Performance

0 of 100

Very Weak

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 current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Universal Logistics and Marten Transport

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

The idea behind Universal Logistics Holdings and Marten Transport 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.