Correlation Between Fossil and Norfolk Southern
Can any of the company-specific risk be diversified away by investing in both Fossil and Norfolk Southern 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 Fossil and Norfolk Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fossil Group and Norfolk Southern, you can compare the effects of market volatilities on Fossil and Norfolk Southern 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 Fossil with a short position of Norfolk Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fossil and Norfolk Southern.
Diversification Opportunities for Fossil and Norfolk Southern
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fossil and Norfolk is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Fossil Group and Norfolk Southern in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norfolk Southern and Fossil 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 Fossil Group are associated (or correlated) with Norfolk Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norfolk Southern has no effect on the direction of Fossil i.e., Fossil and Norfolk Southern go up and down completely randomly.
Pair Corralation between Fossil and Norfolk Southern
Given the investment horizon of 90 days Fossil Group is expected to under-perform the Norfolk Southern. In addition to that, Fossil is 3.16 times more volatile than Norfolk Southern. It trades about -0.03 of its total potential returns per unit of risk. Norfolk Southern is currently generating about 0.02 per unit of volatility. If you would invest 24,234 in Norfolk Southern on September 3, 2024 and sell it today you would earn a total of 3,351 from holding Norfolk Southern or generate 13.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fossil Group vs. Norfolk Southern
Performance |
| Timeline |
| Fossil Group |
| Norfolk Southern |
Fossil and Norfolk Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fossil and Norfolk Southern
The main advantage of trading using opposite Fossil and Norfolk Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fossil position performs unexpectedly, Norfolk Southern 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 Norfolk Southern will offset losses from the drop in Norfolk Southern's long position.| Fossil vs. Lanvin Group Holdings | Fossil vs. Signet Jewelers | Fossil vs. Tapestry | Fossil vs. Capri Holdings |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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