Correlation Between Cimpress and NORFOLK

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

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

Diversification Opportunities for Cimpress and NORFOLK

0.37

Correlation Coefficient

Cimpress  NORFOLK

Weak diversification

The 3 months correlation between Cimpress and NORFOLK is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Cimpress NV 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 Cimpress 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 Cimpress NV 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 Cimpress i.e., Cimpress and NORFOLK go up and down completely randomly.

Pair Corralation between Cimpress and NORFOLK

Given the investment horizon of 90 days Cimpress is expected to generate 59.37 times less return on investment than NORFOLK. But when comparing it to its historical volatility, Cimpress NV is 33.9 times less risky than NORFOLK. It trades about 0.06 of its potential returns per unit of risk. NORFOLK SOUTHN P is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  9,055  in NORFOLK SOUTHN P on October 26, 2024 and sell it today you would lose (1,110) from holding NORFOLK SOUTHN P or give up 12.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	48.58%
Values	Daily Returns

Cimpress NV  vs.  NORFOLK SOUTHN P

Cimpress NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cimpress NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Cimpress is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

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 Cimpress and NORFOLK

The main advantage of trading using opposite Cimpress and NORFOLK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cimpress 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 Cimpress NV 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 Commodity Directory module to find actively traded commodities issued by global exchanges.