Correlation Between Norfolk Southern and Worthington Steel
Can any of the company-specific risk be diversified away by investing in both Norfolk Southern and Worthington Steel 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 Worthington Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norfolk Southern and Worthington Steel, you can compare the effects of market volatilities on Norfolk Southern and Worthington Steel 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 Worthington Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norfolk Southern and Worthington Steel.
Diversification Opportunities for Norfolk Southern and Worthington Steel
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Norfolk and Worthington is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Norfolk Southern and Worthington Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Steel 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 Worthington Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worthington Steel has no effect on the direction of Norfolk Southern i.e., Norfolk Southern and Worthington Steel go up and down completely randomly.
Pair Corralation between Norfolk Southern and Worthington Steel
Considering the 90-day investment horizon Norfolk Southern is expected to generate 39.32 times less return on investment than Worthington Steel. But when comparing it to its historical volatility, Norfolk Southern is 2.4 times less risky than Worthington Steel. It trades about 0.0 of its potential returns per unit of risk. Worthington Steel is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,452 in Worthington Steel on October 13, 2024 and sell it today you would earn a total of 463.00 from holding Worthington Steel or generate 18.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 56.85% |
| Values | Daily Returns |
Norfolk Southern vs. Worthington Steel
Performance |
| Timeline |
| Norfolk Southern |
| Worthington Steel |
Norfolk Southern and Worthington Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norfolk Southern and Worthington Steel
The main advantage of trading using opposite Norfolk Southern and Worthington Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norfolk Southern position performs unexpectedly, Worthington Steel 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 Worthington Steel will offset losses from the drop in Worthington Steel'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 |
| Worthington Steel vs. Sun Country Airlines | Worthington Steel vs. Norfolk Southern | Worthington Steel vs. Verra Mobility Corp | Worthington Steel vs. Hafnia Limited |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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