Correlation Between Norfolk Southern and Marine Products
Can any of the company-specific risk be diversified away by investing in both Norfolk Southern and Marine Products 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 Marine Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norfolk Southern and Marine Products, you can compare the effects of market volatilities on Norfolk Southern and Marine Products 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 Marine Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norfolk Southern and Marine Products.
Diversification Opportunities for Norfolk Southern and Marine Products
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Norfolk and Marine is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Norfolk Southern and Marine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Products 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 Marine Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Products has no effect on the direction of Norfolk Southern i.e., Norfolk Southern and Marine Products go up and down completely randomly.
Pair Corralation between Norfolk Southern and Marine Products
Considering the 90-day investment horizon Norfolk Southern is expected to generate 0.67 times more return on investment than Marine Products. However, Norfolk Southern is 1.5 times less risky than Marine Products. It trades about 0.33 of its potential returns per unit of risk. Marine Products is currently generating about 0.02 per unit of risk. If you would invest 23,577 in Norfolk Southern on October 23, 2024 and sell it today you would earn a total of 1,608 from holding Norfolk Southern or generate 6.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norfolk Southern vs. Marine Products
Performance |
| Timeline |
| Norfolk Southern |
| Marine Products |
Norfolk Southern and Marine Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norfolk Southern and Marine Products
The main advantage of trading using opposite Norfolk Southern and Marine Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norfolk Southern position performs unexpectedly, Marine Products 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 Marine Products will offset losses from the drop in Marine Products' 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 |
| Marine Products vs. Thor Industries | Marine Products vs. BRP Inc | Marine Products vs. Brunswick | Marine Products vs. EZGO Technologies |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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