Correlation Between Canadian National and Greenbrier Companies
Can any of the company-specific risk be diversified away by investing in both Canadian National and Greenbrier 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 Canadian National and Greenbrier Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian National Railway and Greenbrier Companies, you can compare the effects of market volatilities on Canadian National and Greenbrier 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 Canadian National with a short position of Greenbrier Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian National and Greenbrier Companies.
Diversification Opportunities for Canadian National and Greenbrier Companies
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Canadian and Greenbrier is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Canadian National Railway and Greenbrier Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenbrier Companies and Canadian National 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 Canadian National Railway are associated (or correlated) with Greenbrier Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenbrier Companies has no effect on the direction of Canadian National i.e., Canadian National and Greenbrier Companies go up and down completely randomly.
Pair Corralation between Canadian National and Greenbrier Companies
Considering the 90-day investment horizon Canadian National Railway is expected to under-perform the Greenbrier Companies. But the stock apears to be less risky and, when comparing its historical volatility, Canadian National Railway is 2.44 times less risky than Greenbrier Companies. The stock trades about -0.01 of its potential returns per unit of risk. The Greenbrier Companies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,356 in Greenbrier Companies on August 27, 2024 and sell it today you would earn a total of 3,309 from holding Greenbrier Companies or generate 98.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian National Railway vs. Greenbrier Companies
Performance |
| Timeline |
| Canadian National Railway |
| Greenbrier Companies |
Canadian National and Greenbrier Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian National and Greenbrier Companies
The main advantage of trading using opposite Canadian National and Greenbrier Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian National position performs unexpectedly, Greenbrier 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 Greenbrier Companies will offset losses from the drop in Greenbrier Companies' long position.| Canadian National vs. Union Pacific | Canadian National vs. CSX Corporation | Canadian National vs. Norfolk Southern | Canadian National vs. Westinghouse Air Brake |
| Greenbrier Companies vs. LB Foster | Greenbrier Companies vs. Freightcar America | Greenbrier Companies vs. Westinghouse Air Brake | Greenbrier Companies vs. CSX Corporation |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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