Correlation Between FORWARD AIR and Williams Companies

Can any of the company-specific risk be diversified away by investing in both FORWARD AIR and Williams Companies 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 Williams Companies 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 The Williams Companies, you can compare the effects of market volatilities on FORWARD AIR and Williams Companies 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 Williams Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORWARD AIR and Williams Companies.

Diversification Opportunities for FORWARD AIR and Williams Companies

-0.39

Correlation Coefficient

FORWARD AIR  Williams Companies

Very good diversification

The 3 months correlation between FORWARD and Williams is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding FORWARD AIR P and The Williams Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Williams Companies 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 Williams Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Williams Companies has no effect on the direction of FORWARD AIR i.e., FORWARD AIR and Williams Companies go up and down completely randomly.

Pair Corralation between FORWARD AIR and Williams Companies

Assuming the 90 days horizon FORWARD AIR P is expected to generate 2.82 times more return on investment than Williams Companies. However, FORWARD AIR is 2.82 times more volatile than The Williams Companies. It trades about 0.23 of its potential returns per unit of risk. The Williams Companies is currently generating about 0.03 per unit of risk. If you would invest  1,250  in FORWARD AIR P on April 22, 2025 and sell it today you would earn a total of  1,065  from holding FORWARD AIR P or generate 85.2% return on investment over 90 days.

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

FORWARD AIR P  vs.  The Williams Companies

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 18 (%) 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.

The Williams Companies

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Williams Companies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Williams Companies is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FORWARD AIR and Williams Companies

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

The idea behind FORWARD AIR P and The Williams Companies 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.