Correlation Between GM and NORFOLK
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By analyzing existing cross correlation between General Motors and NORFOLK SOUTHN P, you can compare the effects of market volatilities on GM 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 GM with a short position of NORFOLK. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and NORFOLK.
Diversification Opportunities for GM and NORFOLK
Good diversification
The 3 months correlation between GM and NORFOLK is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding General Motors 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 GM 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 General Motors 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 GM i.e., GM and NORFOLK go up and down completely randomly.
Pair Corralation between GM and NORFOLK
Allowing for the 90-day total investment horizon General Motors is expected to generate 10.0 times more return on investment than NORFOLK. However, GM is 10.0 times more volatile than NORFOLK SOUTHN P. It trades about 0.0 of its potential returns per unit of risk. NORFOLK SOUTHN P is currently generating about -0.11 per unit of risk. If you would invest 5,260 in General Motors on September 24, 2024 and sell it today you would lose (79.00) from holding General Motors or give up 1.5% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.24% |
Values | Daily Returns |
General Motors vs. NORFOLK SOUTHN P
Performance |
Timeline |
General Motors |
NORFOLK SOUTHN P |
GM and NORFOLK Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and NORFOLK
The main advantage of trading using opposite GM and NORFOLK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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