Correlation Between Norfolk Southern and Kelso Technologies

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Can any of the company-specific risk be diversified away by investing in both Norfolk Southern and Kelso Technologies 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 Southern and Kelso Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norfolk Southern and Kelso Technologies, you can compare the effects of market volatilities on Norfolk Southern and Kelso Technologies 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 Southern with a short position of Kelso Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norfolk Southern and Kelso Technologies.

Diversification Opportunities for Norfolk Southern and Kelso Technologies

-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Norfolk and Kelso is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Norfolk Southern and Kelso Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kelso Technologies and Norfolk Southern 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 Southern are associated (or correlated) with Kelso Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kelso Technologies has no effect on the direction of Norfolk Southern i.e., Norfolk Southern and Kelso Technologies go up and down completely randomly.

Pair Corralation between Norfolk Southern and Kelso Technologies

Considering the 90-day investment horizon Norfolk Southern is expected to generate 0.26 times more return on investment than Kelso Technologies. However, Norfolk Southern is 3.85 times less risky than Kelso Technologies. It trades about 0.01 of its potential returns per unit of risk. Kelso Technologies is currently generating about -0.02 per unit of risk. If you would invest  24,430  in Norfolk Southern on December 30, 2023 and sell it today you would earn a total of  1,057  from holding Norfolk Southern or generate 4.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy99.8%
ValuesDaily Returns

Norfolk Southern  vs.  Kelso Technologies

 Performance 
       Timeline  
Norfolk Southern 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Norfolk Southern are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Norfolk Southern may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Kelso Technologies 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Kelso Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in April 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Norfolk Southern and Kelso Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Norfolk Southern and Kelso Technologies

The main advantage of trading using opposite Norfolk Southern and Kelso Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norfolk Southern position performs unexpectedly, Kelso Technologies 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 Kelso Technologies will offset losses from the drop in Kelso Technologies' long position.
The idea behind Norfolk Southern and Kelso Technologies 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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