Correlation Between First Merchants and NORFOLK
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By analyzing existing cross correlation between First Merchants and NORFOLK SOUTHN P, you can compare the effects of market volatilities on First Merchants 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 First Merchants with a short position of NORFOLK. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Merchants and NORFOLK.
Diversification Opportunities for First Merchants and NORFOLK
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and NORFOLK is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding First Merchants 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 First Merchants 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 First Merchants 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 First Merchants i.e., First Merchants and NORFOLK go up and down completely randomly.
Pair Corralation between First Merchants and NORFOLK
Given the investment horizon of 90 days First Merchants is expected to under-perform the NORFOLK. In addition to that, First Merchants is 1.55 times more volatile than NORFOLK SOUTHN P. It trades about -0.25 of its total potential returns per unit of risk. NORFOLK SOUTHN P is currently generating about -0.23 per unit of volatility. If you would invest 9,746 in NORFOLK SOUTHN P on September 24, 2024 and sell it today you would lose (488.00) from holding NORFOLK SOUTHN P or give up 5.01% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
First Merchants vs. NORFOLK SOUTHN P
Performance |
Timeline |
First Merchants |
NORFOLK SOUTHN P |
First Merchants and NORFOLK Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Merchants and NORFOLK
The main advantage of trading using opposite First Merchants and NORFOLK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Merchants 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.First Merchants vs. Home Federal Bancorp | First Merchants vs. First Northwest Bancorp | First Merchants vs. HomeTrust Bancshares | First Merchants vs. Lake Shore Bancorp |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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