Correlation Between Norfolk Southern and Superior Plus
Can any of the company-specific risk be diversified away by investing in both Norfolk Southern and Superior Plus 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 Norfolk Southern and Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norfolk Southern and Superior Plus Corp, you can compare the effects of market volatilities on Norfolk Southern and Superior Plus 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 Norfolk Southern with a short position of Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norfolk Southern and Superior Plus.
Diversification Opportunities for Norfolk Southern and Superior Plus
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Norfolk and Superior is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Norfolk Southern and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp and Norfolk Southern 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 Norfolk Southern are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of Norfolk Southern i.e., Norfolk Southern and Superior Plus go up and down completely randomly.
Pair Corralation between Norfolk Southern and Superior Plus
Assuming the 90 days horizon Norfolk Southern is expected to generate 0.75 times more return on investment than Superior Plus. However, Norfolk Southern is 1.33 times less risky than Superior Plus. It trades about 0.02 of its potential returns per unit of risk. Superior Plus Corp is currently generating about -0.02 per unit of risk. If you would invest 22,814 in Norfolk Southern on September 3, 2024 and sell it today you would earn a total of 3,186 from holding Norfolk Southern or generate 13.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norfolk Southern vs. Superior Plus Corp
Performance |
| Timeline |
| Norfolk Southern |
| Superior Plus Corp |
Norfolk Southern and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norfolk Southern and Superior Plus
The main advantage of trading using opposite Norfolk Southern and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norfolk Southern position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| Norfolk Southern vs. Superior Plus Corp | Norfolk Southern vs. NMI Holdings | Norfolk Southern vs. Origin Agritech | Norfolk Southern vs. SIVERS SEMICONDUCTORS AB |
| Superior Plus vs. Collins Foods Limited | Superior Plus vs. Thai Beverage Public | Superior Plus vs. ADRIATIC METALS LS 013355 | Superior Plus vs. Lifeway Foods |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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