Correlation Between Norfolk Southern and JD Sports
Can any of the company-specific risk be diversified away by investing in both Norfolk Southern and JD Sports 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 JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norfolk Southern and JD Sports Fashion, you can compare the effects of market volatilities on Norfolk Southern and JD Sports 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 JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norfolk Southern and JD Sports.
Diversification Opportunities for Norfolk Southern and JD Sports
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Norfolk and JDDSF is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Norfolk Southern and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Norfolk Southern i.e., Norfolk Southern and JD Sports go up and down completely randomly.
Pair Corralation between Norfolk Southern and JD Sports
Considering the 90-day investment horizon Norfolk Southern is expected to generate 0.75 times more return on investment than JD Sports. However, Norfolk Southern is 1.34 times less risky than JD Sports. It trades about 0.11 of its potential returns per unit of risk. JD Sports Fashion is currently generating about 0.03 per unit of risk. If you would invest 21,931 in Norfolk Southern on September 2, 2024 and sell it today you would earn a total of 5,654 from holding Norfolk Southern or generate 25.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norfolk Southern vs. JD Sports Fashion
Performance |
| Timeline |
| Norfolk Southern |
| JD Sports Fashion |
Norfolk Southern and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norfolk Southern and JD Sports
The main advantage of trading using opposite Norfolk Southern and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norfolk Southern position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.| Norfolk Southern vs. Union Pacific | Norfolk Southern vs. Westinghouse Air Brake | Norfolk Southern vs. Trinity Industries | Norfolk Southern vs. Greenbrier Companies |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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