Correlation Between Worthington Steel and NORFOLK

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

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

Diversification Opportunities for Worthington Steel and NORFOLK

0.53

Correlation Coefficient

Worthington Steel  NORFOLK

Very weak diversification

The 3 months correlation between Worthington and NORFOLK is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Worthington Steel 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 Worthington Steel 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 Worthington Steel 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 Worthington Steel i.e., Worthington Steel and NORFOLK go up and down completely randomly.

Pair Corralation between Worthington Steel and NORFOLK

Allowing for the 90-day total investment horizon Worthington Steel is expected to under-perform the NORFOLK. In addition to that, Worthington Steel is 2.58 times more volatile than NORFOLK SOUTHN P. It trades about -0.32 of its total potential returns per unit of risk. NORFOLK SOUTHN P is currently generating about -0.04 per unit of volatility. If you would invest  9,294  in NORFOLK SOUTHN P on October 11, 2024 and sell it today you would lose (134.00) from holding NORFOLK SOUTHN P or give up 1.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	63.41%
Values	Daily Returns

Worthington Steel  vs.  NORFOLK SOUTHN P

Worthington Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worthington Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm 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 latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NORFOLK SOUTHN P investors.

Pair Trading with Worthington Steel and NORFOLK

The main advantage of trading using opposite Worthington Steel and NORFOLK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worthington Steel 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 Worthington Steel 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..