Correlation Between Westrock Coffee and NORFOLK

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

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

Diversification Opportunities for Westrock Coffee and NORFOLK

0.15

Correlation Coefficient

Westrock Coffee  NORFOLK

Average diversification

The 3 months correlation between Westrock and NORFOLK is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Westrock Coffee 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 Westrock Coffee 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 Westrock Coffee 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 Westrock Coffee i.e., Westrock Coffee and NORFOLK go up and down completely randomly.

Pair Corralation between Westrock Coffee and NORFOLK

Given the investment horizon of 90 days Westrock Coffee is expected to under-perform the NORFOLK. In addition to that, Westrock Coffee is 6.29 times more volatile than NORFOLK SOUTHN P. It trades about -0.01 of its total potential returns per unit of risk. NORFOLK SOUTHN P is currently generating about 0.05 per unit of volatility. If you would invest  10,331  in NORFOLK SOUTHN P on October 26, 2024 and sell it today you would earn a total of  20.00  from holding NORFOLK SOUTHN P or generate 0.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	44.44%
Values	Daily Returns

Westrock Coffee  vs.  NORFOLK SOUTHN P

Westrock Coffee

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Westrock Coffee has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Westrock Coffee is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

NORFOLK SOUTHN P

Risk-Adjusted Performance

0 of 100

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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Westrock Coffee and NORFOLK

The main advantage of trading using opposite Westrock Coffee and NORFOLK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westrock Coffee 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 Westrock Coffee 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.