Correlation Between Genpact and CSX
Can any of the company-specific risk be diversified away by investing in both Genpact 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 Genpact and CSX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genpact Limited and CSX Corporation, you can compare the effects of market volatilities on Genpact 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 Genpact with a short position of CSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genpact and CSX.
Diversification Opportunities for Genpact and CSX
Poor diversification
The 3 months correlation between Genpact and CSX is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation and Genpact 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 Genpact Limited 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 Genpact i.e., Genpact and CSX go up and down completely randomly.
Pair Corralation between Genpact and CSX
Taking into account the 90-day investment horizon Genpact Limited is expected to generate 1.3 times more return on investment than CSX. However, Genpact is 1.3 times more volatile than CSX Corporation. It trades about 0.08 of its potential returns per unit of risk. CSX Corporation is currently generating about 0.04 per unit of risk. If you would invest 3,339 in Genpact Limited on August 26, 2024 and sell it today you would earn a total of 1,280 from holding Genpact Limited or generate 38.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genpact Limited vs. CSX Corp.
Performance |
| Timeline |
| Genpact Limited |
| CSX Corporation |
Genpact and CSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genpact and CSX
The main advantage of trading using opposite Genpact and CSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genpact 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.| Genpact vs. Oneconnect Financial Technology | Genpact vs. Global Business Travel | Genpact vs. Alight Inc | Genpact vs. CS Disco LLC |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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