Correlation Between THORNEY TECHS and CSX
Can any of the company-specific risk be diversified away by investing in both THORNEY TECHS 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 THORNEY TECHS and CSX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THORNEY TECHS LTD and CSX Corporation, you can compare the effects of market volatilities on THORNEY TECHS 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 THORNEY TECHS with a short position of CSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of THORNEY TECHS and CSX.
Diversification Opportunities for THORNEY TECHS and CSX
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between THORNEY and CSX is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding THORNEY TECHS LTD and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation and THORNEY TECHS 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 THORNEY TECHS LTD 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 THORNEY TECHS i.e., THORNEY TECHS and CSX go up and down completely randomly.
Pair Corralation between THORNEY TECHS and CSX
Assuming the 90 days horizon THORNEY TECHS LTD is expected to under-perform the CSX. In addition to that, THORNEY TECHS is 2.65 times more volatile than CSX Corporation. It trades about -0.03 of its total potential returns per unit of risk. CSX Corporation is currently generating about 0.06 per unit of volatility. If you would invest 3,108 in CSX Corporation on November 3, 2024 and sell it today you would earn a total of 47.00 from holding CSX Corporation or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
THORNEY TECHS LTD vs. CSX Corp.
Performance |
| Timeline |
| THORNEY TECHS LTD |
| CSX Corporation |
THORNEY TECHS and CSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THORNEY TECHS and CSX
The main advantage of trading using opposite THORNEY TECHS and CSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THORNEY TECHS 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.| THORNEY TECHS vs. Nok Airlines PCL | THORNEY TECHS vs. Acadia Healthcare | THORNEY TECHS vs. CARDINAL HEALTH | THORNEY TECHS vs. China Eastern Airlines |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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