Correlation Between Entegris and NORFOLK

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

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

Diversification Opportunities for Entegris and NORFOLK

0.33

Correlation Coefficient

Entegris  NORFOLK

Weak diversification

The 3 months correlation between Entegris and NORFOLK is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Entegris and NORFOLK SOUTHERN PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORFOLK SOUTHERN PORATION and Entegris 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 Entegris 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 SOUTHERN PORATION has no effect on the direction of Entegris i.e., Entegris and NORFOLK go up and down completely randomly.

Pair Corralation between Entegris and NORFOLK

Given the investment horizon of 90 days Entegris is expected to generate 1.71 times more return on investment than NORFOLK. However, Entegris is 1.71 times more volatile than NORFOLK SOUTHERN PORATION. It trades about 0.1 of its potential returns per unit of risk. NORFOLK SOUTHERN PORATION is currently generating about 0.02 per unit of risk. If you would invest  10,223  in Entegris on October 26, 2024 and sell it today you would earn a total of  303.00  from holding Entegris or generate 2.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Entegris  vs.  NORFOLK SOUTHERN PORATION

Entegris

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entegris has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Entegris is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

NORFOLK SOUTHERN PORATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NORFOLK SOUTHERN PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NORFOLK is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Entegris and NORFOLK

The main advantage of trading using opposite Entegris and NORFOLK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entegris 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 Entegris and NORFOLK SOUTHERN PORATION 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 Transaction History module to view history of all your transactions and understand their impact on performance.