Correlation Between CSX and Comcast Corp

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

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

Diversification Opportunities for CSX and Comcast Corp

0.45

Correlation Coefficient

CSX  Comcast Corp

Very weak diversification

The 3 months correlation between CSX and Comcast is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding CSX Corp. and Comcast Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comcast Corp and CSX 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 CSX Corporation are associated (or correlated) with Comcast Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comcast Corp has no effect on the direction of CSX i.e., CSX and Comcast Corp go up and down completely randomly.

Pair Corralation between CSX and Comcast Corp

Considering the 90-day investment horizon CSX Corporation is expected to under-perform the Comcast Corp. But the stock apears to be less risky and, when comparing its historical volatility, CSX Corporation is 1.62 times less risky than Comcast Corp. The stock trades about -0.41 of its potential returns per unit of risk. The Comcast Corp is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest  4,181  in Comcast Corp on February 2, 2024 and sell it today you would lose (340.00) from holding Comcast Corp or give up 8.13% of portfolio value over 90 days.

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

CSX Corp.  vs.  Comcast Corp

CSX Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSX Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Comcast Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Comcast Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with CSX and Comcast Corp

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

The idea behind CSX Corporation and Comcast Corp 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 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..