Correlation Between Ford and NORFOLK
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By analyzing existing cross correlation between Ford Motor and NORFOLK SOUTHN P, you can compare the effects of market volatilities on Ford 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 Ford with a short position of NORFOLK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and NORFOLK.
Diversification Opportunities for Ford and NORFOLK
Very weak diversification
The 3 months correlation between Ford and NORFOLK is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor 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 Ford 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 Ford Motor 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 Ford i.e., Ford and NORFOLK go up and down completely randomly.
Pair Corralation between Ford and NORFOLK
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the NORFOLK. In addition to that, Ford is 9.97 times more volatile than NORFOLK SOUTHN P. It trades about -0.11 of its total potential returns per unit of risk. NORFOLK SOUTHN P is currently generating about -0.11 per unit of volatility. If you would invest 9,749 in NORFOLK SOUTHN P on September 24, 2024 and sell it today you would lose (100.00) from holding NORFOLK SOUTHN P or give up 1.03% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Ford Motor vs. NORFOLK SOUTHN P
Performance |
Timeline |
Ford Motor |
NORFOLK SOUTHN P |
Ford and NORFOLK Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ford and NORFOLK
The main advantage of trading using opposite Ford and NORFOLK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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 Ford Motor 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.NORFOLK vs. Sun Life Financial | NORFOLK vs. Pekin Life Insurance | NORFOLK vs. Direct Line Insurance | NORFOLK vs. Sabre Insurance Group |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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