Correlation Between Norfolk Southern and Amgen
Can any of the company-specific risk be diversified away by investing in both Norfolk Southern and Amgen 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 Amgen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norfolk Southern and Amgen Inc, you can compare the effects of market volatilities on Norfolk Southern and Amgen 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 Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norfolk Southern and Amgen.
Diversification Opportunities for Norfolk Southern and Amgen
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Norfolk and Amgen is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Norfolk Southern and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc 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 Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of Norfolk Southern i.e., Norfolk Southern and Amgen go up and down completely randomly.
Pair Corralation between Norfolk Southern and Amgen
Considering the 90-day investment horizon Norfolk Southern is expected to generate 1.04 times more return on investment than Amgen. However, Norfolk Southern is 1.04 times more volatile than Amgen Inc. It trades about 0.06 of its potential returns per unit of risk. Amgen Inc is currently generating about 0.05 per unit of risk. If you would invest 20,103 in Norfolk Southern on August 31, 2024 and sell it today you would earn a total of 7,435 from holding Norfolk Southern or generate 36.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norfolk Southern vs. Amgen Inc
Performance |
| Timeline |
| Norfolk Southern |
| Amgen Inc |
Norfolk Southern and Amgen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norfolk Southern and Amgen
The main advantage of trading using opposite Norfolk Southern and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norfolk Southern position performs unexpectedly, Amgen 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 Amgen will offset losses from the drop in Amgen's long position.| Norfolk Southern vs. Union Pacific | Norfolk Southern vs. Canadian Pacific Railway | Norfolk Southern vs. Canadian National Railway | Norfolk Southern vs. Westinghouse Air Brake |
| Amgen vs. Pfizer Inc | Amgen vs. RLJ Lodging Trust | Amgen vs. Aquagold International | Amgen vs. Stepstone Group |
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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