Correlation Between Bill and NORFOLK

Can any of the company-specific risk be diversified away by investing in both Bill and NORFOLK 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 Bill and NORFOLK into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bill Com Holdings and NORFOLK SOUTHN P, you can compare the effects of market volatilities on Bill and NORFOLK 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 Bill with a short position of NORFOLK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bill and NORFOLK.

Diversification Opportunities for Bill and NORFOLK

-0.03

Correlation Coefficient

Bill  NORFOLK

Good diversification

The 3 months correlation between Bill and NORFOLK is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bill Com Holdings and NORFOLK SOUTHN P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORFOLK SOUTHN P and Bill 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 Bill Com Holdings are associated (or correlated) with NORFOLK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORFOLK SOUTHN P has no effect on the direction of Bill i.e., Bill and NORFOLK go up and down completely randomly.

Pair Corralation between Bill and NORFOLK

Given the investment horizon of 90 days Bill Com Holdings is expected to generate 2.62 times more return on investment than NORFOLK. However, Bill is 2.62 times more volatile than NORFOLK SOUTHN P. It trades about 0.21 of its potential returns per unit of risk. NORFOLK SOUTHN P is currently generating about -0.15 per unit of risk. If you would invest  5,551  in Bill Com Holdings on October 4, 2024 and sell it today you would earn a total of  2,920  from holding Bill Com Holdings or generate 52.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	38.1%
Values	Daily Returns

Bill Com Holdings  vs.  NORFOLK SOUTHN P

Bill Com Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bill Com Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Bill disclosed solid returns over the last few months and may actually be approaching a breakup point.

NORFOLK SOUTHN P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NORFOLK SOUTHN P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NORFOLK SOUTHN P investors.

Pair Trading with Bill and NORFOLK

The main advantage of trading using opposite Bill and NORFOLK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bill position performs unexpectedly, NORFOLK 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 NORFOLK will offset losses from the drop in NORFOLK's long position.

The idea behind Bill Com Holdings and NORFOLK SOUTHN P pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.