Correlation Between Talanx AG and CSX

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

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

Diversification Opportunities for Talanx AG and CSX

0.34

Correlation Coefficient

Talanx AG  CSX

Weak diversification

The 3 months correlation between Talanx and CSX is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation and Talanx AG 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 Talanx AG are associated (or correlated) with CSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX Corporation has no effect on the direction of Talanx AG i.e., Talanx AG and CSX go up and down completely randomly.

Pair Corralation between Talanx AG and CSX

Assuming the 90 days horizon Talanx AG is expected to generate 1.11 times more return on investment than CSX. However, Talanx AG is 1.11 times more volatile than CSX Corporation. It trades about 0.01 of its potential returns per unit of risk. CSX Corporation is currently generating about -0.47 per unit of risk. If you would invest  8,125  in Talanx AG on October 4, 2024 and sell it today you would earn a total of  0.00  from holding Talanx AG or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Talanx AG  vs.  CSX Corp.

Talanx AG

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Talanx AG may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CSX Corporation

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CSX Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CSX is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Talanx AG and CSX

The main advantage of trading using opposite Talanx AG and CSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talanx AG position performs unexpectedly, CSX 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 CSX will offset losses from the drop in CSX's long position.

The idea behind Talanx AG and CSX Corporation 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.