Correlation Between Alstom SA and CSX
Can any of the company-specific risk be diversified away by investing in both Alstom SA and CSX 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 Alstom SA and CSX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alstom SA and CSX Corporation, you can compare the effects of market volatilities on Alstom SA and CSX 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 Alstom SA with a short position of CSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alstom SA and CSX.
Diversification Opportunities for Alstom SA and CSX
Very good diversification
The 3 months correlation between Alstom and CSX is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Alstom SA and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation and Alstom SA 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 Alstom SA are associated (or correlated) with CSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX Corporation has no effect on the direction of Alstom SA i.e., Alstom SA and CSX go up and down completely randomly.
Pair Corralation between Alstom SA and CSX
Assuming the 90 days horizon Alstom SA is expected to generate 2.39 times more return on investment than CSX. However, Alstom SA is 2.39 times more volatile than CSX Corporation. It trades about 0.09 of its potential returns per unit of risk. CSX Corporation is currently generating about -0.04 per unit of risk. If you would invest 1,199 in Alstom SA on October 22, 2024 and sell it today you would earn a total of 872.00 from holding Alstom SA or generate 72.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.56% |
| Values | Daily Returns |
Alstom SA vs. CSX Corp.
Performance |
| Timeline |
| Alstom SA |
| CSX Corporation |
Alstom SA and CSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alstom SA and CSX
The main advantage of trading using opposite Alstom SA and CSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alstom SA position performs unexpectedly, CSX 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 CSX will offset losses from the drop in CSX's long position.| Alstom SA vs. West Japan Railway | Alstom SA vs. Central Japan Railway | Alstom SA vs. LB Foster | Alstom SA vs. Norfolk Southern |
| CSX vs. Union Pacific | CSX vs. Canadian National Railway | CSX vs. Canadian Pacific Railway | CSX vs. Westinghouse Air Brake |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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