Correlation Between MEDIFAST INC and Norfolk Southern
Can any of the company-specific risk be diversified away by investing in both MEDIFAST INC 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 MEDIFAST INC and Norfolk Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MEDIFAST INC and Norfolk Southern, you can compare the effects of market volatilities on MEDIFAST INC 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 MEDIFAST INC with a short position of Norfolk Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDIFAST INC and Norfolk Southern.
Diversification Opportunities for MEDIFAST INC and Norfolk Southern
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MEDIFAST and Norfolk is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding MEDIFAST INC and Norfolk Southern in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norfolk Southern and MEDIFAST INC 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 MEDIFAST INC 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 MEDIFAST INC i.e., MEDIFAST INC and Norfolk Southern go up and down completely randomly.
Pair Corralation between MEDIFAST INC and Norfolk Southern
Considering the 90-day investment horizon MEDIFAST INC is expected to under-perform the Norfolk Southern. In addition to that, MEDIFAST INC is 1.57 times more volatile than Norfolk Southern. It trades about -0.08 of its total potential returns per unit of risk. Norfolk Southern is currently generating about 0.03 per unit of volatility. If you would invest 25,009 in Norfolk Southern on November 1, 2024 and sell it today you would earn a total of 707.00 from holding Norfolk Southern or generate 2.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MEDIFAST INC vs. Norfolk Southern
Performance |
| Timeline |
| MEDIFAST INC |
| Norfolk Southern |
MEDIFAST INC and Norfolk Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MEDIFAST INC and Norfolk Southern
The main advantage of trading using opposite MEDIFAST INC and Norfolk Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEDIFAST INC 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.| MEDIFAST INC vs. Rollins | MEDIFAST INC vs. Carriage Services | MEDIFAST INC vs. Service International | MEDIFAST INC vs. Bright Horizons Family |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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