Correlation Between 26442CAN4 and Norfolk Southern

Can any of the company-specific risk be diversified away by investing in both 26442CAN4 and Norfolk Southern 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 26442CAN4 and Norfolk Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DUKE ENERGY CAROLINAS and Norfolk Southern, you can compare the effects of market volatilities on 26442CAN4 and Norfolk Southern 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 26442CAN4 with a short position of Norfolk Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of 26442CAN4 and Norfolk Southern.

Diversification Opportunities for 26442CAN4 and Norfolk Southern

-0.34

Correlation Coefficient

26442CAN4  Norfolk Southern

Very good diversification

The 3 months correlation between 26442CAN4 and Norfolk is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding DUKE ENERGY CAROLINAS and Norfolk Southern in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norfolk Southern and 26442CAN4 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 DUKE ENERGY CAROLINAS are associated (or correlated) with Norfolk Southern. 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 has no effect on the direction of 26442CAN4 i.e., 26442CAN4 and Norfolk Southern go up and down completely randomly.

Pair Corralation between 26442CAN4 and Norfolk Southern

Assuming the 90 days trading horizon DUKE ENERGY CAROLINAS is expected to generate 0.5 times more return on investment than Norfolk Southern. However, DUKE ENERGY CAROLINAS is 1.99 times less risky than Norfolk Southern. It trades about 0.02 of its potential returns per unit of risk. Norfolk Southern is currently generating about 0.0 per unit of risk. If you would invest  8,098  in DUKE ENERGY CAROLINAS on December 25, 2024 and sell it today you would earn a total of  44.00  from holding DUKE ENERGY CAROLINAS or generate 0.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.44%
Values	Daily Returns

DUKE ENERGY CAROLINAS  vs.  Norfolk Southern

DUKE ENERGY CAROLINAS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DUKE ENERGY CAROLINAS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 26442CAN4 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Norfolk Southern

Risk-Adjusted Performance

Very Weak

Over the last 90 days Norfolk Southern has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Norfolk Southern is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with 26442CAN4 and Norfolk Southern

The main advantage of trading using opposite 26442CAN4 and Norfolk Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 26442CAN4 position performs unexpectedly, Norfolk Southern 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 Southern will offset losses from the drop in Norfolk Southern's long position.

The idea behind DUKE ENERGY CAROLINAS and Norfolk Southern 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 CEOs Directory module to screen CEOs from public companies around the world.