Correlation Between Chemours and NORFOLK

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

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

Diversification Opportunities for Chemours and NORFOLK

0.18

Correlation Coefficient

Chemours  NORFOLK

Average diversification

The 3 months correlation between Chemours and NORFOLK is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co 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 Chemours 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 Chemours Co 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 Chemours i.e., Chemours and NORFOLK go up and down completely randomly.

Pair Corralation between Chemours and NORFOLK

Allowing for the 90-day total investment horizon Chemours Co is expected to under-perform the NORFOLK. In addition to that, Chemours is 4.32 times more volatile than NORFOLK SOUTHN P. It trades about -0.21 of its total potential returns per unit of risk. NORFOLK SOUTHN P is currently generating about -0.48 per unit of volatility. If you would invest  9,513  in NORFOLK SOUTHN P on October 11, 2024 and sell it today you would lose (471.00) from holding NORFOLK SOUTHN P or give up 4.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	61.9%
Values	Daily Returns

Chemours Co  vs.  NORFOLK SOUTHN P

Chemours

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chemours Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for NORFOLK SOUTHN P investors.

Pair Trading with Chemours and NORFOLK

The main advantage of trading using opposite Chemours and NORFOLK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours 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 Chemours Co 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.