Correlation Between Canadian National and XPO Logistics
Can any of the company-specific risk be diversified away by investing in both Canadian National and XPO Logistics 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 Canadian National and XPO Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian National Railway and XPO Logistics, you can compare the effects of market volatilities on Canadian National and XPO Logistics 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 Canadian National with a short position of XPO Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian National and XPO Logistics.
Diversification Opportunities for Canadian National and XPO Logistics
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Canadian and XPO is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Canadian National Railway and XPO Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XPO Logistics and Canadian National 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 Canadian National Railway are associated (or correlated) with XPO Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XPO Logistics has no effect on the direction of Canadian National i.e., Canadian National and XPO Logistics go up and down completely randomly.
Pair Corralation between Canadian National and XPO Logistics
Considering the 90-day investment horizon Canadian National Railway is expected to under-perform the XPO Logistics. But the stock apears to be less risky and, when comparing its historical volatility, Canadian National Railway is 2.32 times less risky than XPO Logistics. The stock trades about -0.16 of its potential returns per unit of risk. The XPO Logistics is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 10,734 in XPO Logistics on September 12, 2024 and sell it today you would earn a total of 5,079 from holding XPO Logistics or generate 47.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Canadian National Railway vs. XPO Logistics
Performance |
Timeline |
Canadian National Railway |
XPO Logistics |
Canadian National and XPO Logistics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Canadian National and XPO Logistics
The main advantage of trading using opposite Canadian National and XPO Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian National position performs unexpectedly, XPO Logistics 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 XPO Logistics will offset losses from the drop in XPO Logistics' long position.Canadian National vs. Union Pacific | Canadian National vs. CSX Corporation | Canadian National vs. Norfolk Southern | Canadian National vs. Westinghouse Air Brake |
XPO Logistics vs. ArcBest Corp | XPO Logistics vs. Marten Transport | XPO Logistics vs. Werner Enterprises | XPO Logistics vs. Knight Transportation |
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.
Other Complementary Tools
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
CEOs Directory Screen CEOs from public companies around the world |