Correlation Between Freightcar America and CSX
Can any of the company-specific risk be diversified away by investing in both Freightcar America and CSX 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 Freightcar America and CSX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freightcar America and CSX Corporation, you can compare the effects of market volatilities on Freightcar America and CSX 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 Freightcar America with a short position of CSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freightcar America and CSX.
Diversification Opportunities for Freightcar America and CSX
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Freightcar and CSX is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Freightcar America and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation and Freightcar America 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 Freightcar America are associated (or correlated) with CSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX Corporation has no effect on the direction of Freightcar America i.e., Freightcar America and CSX go up and down completely randomly.
Pair Corralation between Freightcar America and CSX
Given the investment horizon of 90 days Freightcar America is expected to generate 3.78 times more return on investment than CSX. However, Freightcar America is 3.78 times more volatile than CSX Corporation. It trades about 0.14 of its potential returns per unit of risk. CSX Corporation is currently generating about 0.04 per unit of risk. If you would invest 234.00 in Freightcar America on August 26, 2024 and sell it today you would earn a total of 711.00 from holding Freightcar America or generate 303.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freightcar America vs. CSX Corp.
Performance |
| Timeline |
| Freightcar America |
| CSX Corporation |
Freightcar America and CSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freightcar America and CSX
The main advantage of trading using opposite Freightcar America and CSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freightcar America position performs unexpectedly, CSX 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 CSX will offset losses from the drop in CSX's long position.| Freightcar America vs. Greenbrier Companies | Freightcar America vs. LB Foster | Freightcar America vs. Westinghouse Air Brake | Freightcar America vs. CSX Corporation |
| CSX vs. Union Pacific | CSX vs. Canadian National Railway | CSX vs. Canadian Pacific Railway | CSX vs. Westinghouse Air Brake |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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