Correlation Between Marten Transport and Heartland Express

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

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

Diversification Opportunities for Marten Transport and Heartland Express

0.94

Correlation Coefficient

Marten Transport  Heartland Express

Almost no diversification

The 3 months correlation between Marten and Heartland is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Marten Transport and Heartland Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Express and Marten Transport 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 Marten Transport are associated (or correlated) with Heartland Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Express has no effect on the direction of Marten Transport i.e., Marten Transport and Heartland Express go up and down completely randomly.

Pair Corralation between Marten Transport and Heartland Express

Given the investment horizon of 90 days Marten Transport is expected to under-perform the Heartland Express. But the stock apears to be less risky and, when comparing its historical volatility, Marten Transport is 1.19 times less risky than Heartland Express. The stock trades about -0.05 of its potential returns per unit of risk. The Heartland Express is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,090  in Heartland Express on February 5, 2024 and sell it today you would lose (13.00) from holding Heartland Express or give up 1.19% of portfolio value over 90 days.

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

Marten Transport  vs.  Heartland Express

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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Heartland Express

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heartland Express has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Marten Transport and Heartland Express

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

The idea behind Marten Transport and Heartland Express 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.