Correlation Between NORFOLK and Chemours

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

By analyzing existing cross correlation between NORFOLK SOUTHN P and Chemours Co, you can compare the effects of market volatilities on NORFOLK and Chemours 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 NORFOLK with a short position of Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORFOLK and Chemours.

Diversification Opportunities for NORFOLK and Chemours

-0.5

Correlation Coefficient

NORFOLK  Chemours

Very good diversification

The 3 months correlation between NORFOLK and Chemours is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding NORFOLK SOUTHN P and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours and NORFOLK 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 NORFOLK SOUTHN P are associated (or correlated) with Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of NORFOLK i.e., NORFOLK and Chemours go up and down completely randomly.

Pair Corralation between NORFOLK and Chemours

Assuming the 90 days trading horizon NORFOLK SOUTHN P is expected to generate 0.39 times more return on investment than Chemours. However, NORFOLK SOUTHN P is 2.55 times less risky than Chemours. It trades about -0.08 of its potential returns per unit of risk. Chemours Co is currently generating about -0.09 per unit of risk. If you would invest  9,128  in NORFOLK SOUTHN P on December 23, 2024 and sell it today you would lose (368.00) from holding NORFOLK SOUTHN P or give up 4.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	68.85%
Values	Daily Returns

NORFOLK SOUTHN P  vs.  Chemours Co

NORFOLK SOUTHN P

Risk-Adjusted Performance

Very Weak

Over the last 90 days NORFOLK SOUTHN P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NORFOLK is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Chemours

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chemours Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with NORFOLK and Chemours

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

The idea behind NORFOLK SOUTHN P and Chemours Co 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.