Correlation Between CSX and KRISPY KREME
Can any of the company-specific risk be diversified away by investing in both CSX and KRISPY KREME 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 KRISPY KREME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSX Corporation and KRISPY KREME DL 01, you can compare the effects of market volatilities on CSX and KRISPY KREME 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 KRISPY KREME. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSX and KRISPY KREME.
Diversification Opportunities for CSX and KRISPY KREME
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between CSX and KRISPY is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding CSX Corp. and KRISPY KREME DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KRISPY KREME DL 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 KRISPY KREME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KRISPY KREME DL has no effect on the direction of CSX i.e., CSX and KRISPY KREME go up and down completely randomly.
Pair Corralation between CSX and KRISPY KREME
Assuming the 90 days trading horizon CSX Corporation is expected to generate 0.47 times more return on investment than KRISPY KREME. However, CSX Corporation is 2.14 times less risky than KRISPY KREME. It trades about 0.02 of its potential returns per unit of risk. KRISPY KREME DL 01 is currently generating about -0.02 per unit of risk. If you would invest 2,968 in CSX Corporation on September 12, 2024 and sell it today you would earn a total of 272.00 from holding CSX Corporation or generate 9.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSX Corp. vs. KRISPY KREME DL 01
Performance |
| Timeline |
| CSX Corporation |
| KRISPY KREME DL |
CSX and KRISPY KREME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSX and KRISPY KREME
The main advantage of trading using opposite CSX and KRISPY KREME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSX position performs unexpectedly, KRISPY KREME 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 KRISPY KREME will offset losses from the drop in KRISPY KREME's long position.The idea behind CSX Corporation and KRISPY KREME DL 01 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.| KRISPY KREME vs. Woolworths Group Limited | KRISPY KREME vs. Loblaw Companies Limited | KRISPY KREME vs. Superior Plus Corp | KRISPY KREME vs. SIVERS SEMICONDUCTORS AB |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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