Correlation Between CSX and Greenbrier Companies
Can any of the company-specific risk be diversified away by investing in both CSX 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 CSX and Greenbrier Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSX Corporation and Greenbrier Companies, you can compare the effects of market volatilities on CSX 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 CSX with a short position of Greenbrier Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSX and Greenbrier Companies.
Diversification Opportunities for CSX and Greenbrier Companies
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CSX and Greenbrier is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding CSX Corp. and Greenbrier Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenbrier Companies and CSX 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 CSX Corporation 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 CSX i.e., CSX and Greenbrier Companies go up and down completely randomly.
Pair Corralation between CSX and Greenbrier Companies
Considering the 90-day investment horizon CSX is expected to generate 4.8 times less return on investment than Greenbrier Companies. But when comparing it to its historical volatility, CSX Corporation is 1.73 times less risky than Greenbrier Companies. It trades about 0.11 of its potential returns per unit of risk. Greenbrier Companies is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 5,120 in Greenbrier Companies on August 24, 2024 and sell it today you would earn a total of 1,475 from holding Greenbrier Companies or generate 28.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSX Corp. vs. Greenbrier Companies
Performance |
| Timeline |
| CSX Corporation |
| Greenbrier Companies |
CSX and Greenbrier Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSX and Greenbrier Companies
The main advantage of trading using opposite CSX and Greenbrier Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSX 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.| CSX vs. Union Pacific | CSX vs. Canadian National Railway | CSX vs. Canadian Pacific Railway | CSX 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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