Correlation Between North American and CSX
Can any of the company-specific risk be diversified away by investing in both North American 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 North American and CSX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Construction and CSX Corporation, you can compare the effects of market volatilities on North American 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 North American with a short position of CSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and CSX.
Diversification Opportunities for North American and CSX
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between North and CSX is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding North American Construction and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation and North American 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 North American Construction 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 North American i.e., North American and CSX go up and down completely randomly.
Pair Corralation between North American and CSX
Assuming the 90 days horizon North American Construction is expected to under-perform the CSX. In addition to that, North American is 1.62 times more volatile than CSX Corporation. It trades about 0.0 of its total potential returns per unit of risk. CSX Corporation is currently generating about 0.04 per unit of volatility. If you would invest 2,762 in CSX Corporation on September 12, 2024 and sell it today you would earn a total of 487.00 from holding CSX Corporation or generate 17.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Construction vs. CSX Corp.
Performance |
| Timeline |
| North American Const |
| CSX Corporation |
North American and CSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and CSX
The main advantage of trading using opposite North American and CSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American 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.| North American vs. Tenaris SA | North American vs. NOV Inc | North American vs. Superior Plus Corp | North American vs. SIVERS SEMICONDUCTORS AB |
| CSX vs. North American Construction | CSX vs. GigaMedia | CSX vs. EAST SIDE GAMES | CSX vs. Daito Trust Construction |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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