Correlation Between Azul SA and CSX

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

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

Diversification Opportunities for Azul SA and CSX

0.73

Correlation Coefficient

Azul SA  CSX

Poor diversification

The 3 months correlation between Azul and CSX is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Azul SA and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation and Azul SA 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 Azul SA are associated (or correlated) with CSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX Corporation has no effect on the direction of Azul SA i.e., Azul SA and CSX go up and down completely randomly.

Pair Corralation between Azul SA and CSX

Given the investment horizon of 90 days Azul SA is expected to under-perform the CSX. In addition to that, Azul SA is 3.73 times more volatile than CSX Corporation. It trades about -0.07 of its total potential returns per unit of risk. CSX Corporation is currently generating about 0.0 per unit of volatility. If you would invest  3,080  in CSX Corporation on February 4, 2025 and sell it today you would lose (233.00) from holding CSX Corporation or give up 7.56% of portfolio value over 90 days.

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

Azul SA  vs.  CSX Corp.

Azul SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Azul SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in June 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

CSX Corporation

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Azul SA and CSX

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

The idea behind Azul SA and CSX Corporation 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.