Correlation Between FORWARD AIR and MODIVCARE INC

Can any of the company-specific risk be diversified away by investing in both FORWARD AIR and MODIVCARE INC 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 FORWARD AIR and MODIVCARE INC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FORWARD AIR P and MODIVCARE INC DL 001, you can compare the effects of market volatilities on FORWARD AIR and MODIVCARE INC 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 FORWARD AIR with a short position of MODIVCARE INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORWARD AIR and MODIVCARE INC.

Diversification Opportunities for FORWARD AIR and MODIVCARE INC

0.71

Correlation Coefficient

FORWARD AIR  MODIVCARE INC

Poor diversification

The 3 months correlation between FORWARD and MODIVCARE is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding FORWARD AIR P and MODIVCARE INC DL 001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MODIVCARE INC DL and FORWARD AIR 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 FORWARD AIR P are associated (or correlated) with MODIVCARE INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MODIVCARE INC DL has no effect on the direction of FORWARD AIR i.e., FORWARD AIR and MODIVCARE INC go up and down completely randomly.

Pair Corralation between FORWARD AIR and MODIVCARE INC

Assuming the 90 days horizon FORWARD AIR is expected to generate 2.82 times less return on investment than MODIVCARE INC. But when comparing it to its historical volatility, FORWARD AIR P is 3.71 times less risky than MODIVCARE INC. It trades about 0.21 of its potential returns per unit of risk. MODIVCARE INC DL 001 is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  92.00  in MODIVCARE INC DL 001 on April 24, 2025 and sell it today you would earn a total of  170.00  from holding MODIVCARE INC DL 001 or generate 184.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

FORWARD AIR P  vs.  MODIVCARE INC DL 001

FORWARD AIR P

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FORWARD AIR P are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FORWARD AIR reported solid returns over the last few months and may actually be approaching a breakup point.

MODIVCARE INC DL

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MODIVCARE INC DL 001 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, MODIVCARE INC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FORWARD AIR and MODIVCARE INC

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

The idea behind FORWARD AIR P and MODIVCARE INC DL 001 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.