Correlation Between Norfolk Southern and Fossil
Can any of the company-specific risk be diversified away by investing in both Norfolk Southern and Fossil 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 Fossil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norfolk Southern and Fossil Group, you can compare the effects of market volatilities on Norfolk Southern and Fossil 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 Fossil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norfolk Southern and Fossil.
Diversification Opportunities for Norfolk Southern and Fossil
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Norfolk and Fossil is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Norfolk Southern and Fossil Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fossil Group 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 Fossil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fossil Group has no effect on the direction of Norfolk Southern i.e., Norfolk Southern and Fossil go up and down completely randomly.
Pair Corralation between Norfolk Southern and Fossil
Considering the 90-day investment horizon Norfolk Southern is expected to generate 0.32 times more return on investment than Fossil. However, Norfolk Southern is 3.16 times less risky than Fossil. It trades about 0.02 of its potential returns per unit of risk. Fossil Group is currently generating about -0.03 per unit of risk. If you would invest 24,234 in Norfolk Southern on September 3, 2024 and sell it today you would earn a total of 3,351 from holding Norfolk Southern or generate 13.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norfolk Southern vs. Fossil Group
Performance |
| Timeline |
| Norfolk Southern |
| Fossil Group |
Norfolk Southern and Fossil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norfolk Southern and Fossil
The main advantage of trading using opposite Norfolk Southern and Fossil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norfolk Southern position performs unexpectedly, Fossil 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 Fossil will offset losses from the drop in Fossil's long position.The idea behind Norfolk Southern and Fossil Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Fossil vs. Lanvin Group Holdings | Fossil vs. Signet Jewelers | Fossil vs. Tapestry | Fossil vs. Capri Holdings |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |