Correlation Between MTRLimited and CSX

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

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

Diversification Opportunities for MTRLimited and CSX

0.7

Correlation Coefficient

MTRLimited  CSX

Poor diversification

The 3 months correlation between MTRLimited and CSX is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding MTR Limited and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation and MTRLimited 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 MTR Limited 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 MTRLimited i.e., MTRLimited and CSX go up and down completely randomly.

Pair Corralation between MTRLimited and CSX

Assuming the 90 days horizon MTRLimited is expected to generate 4.34 times less return on investment than CSX. In addition to that, MTRLimited is 1.07 times more volatile than CSX Corporation. It trades about 0.06 of its total potential returns per unit of risk. CSX Corporation is currently generating about 0.27 per unit of volatility. If you would invest  2,362  in CSX Corporation on April 22, 2025 and sell it today you would earn a total of  683.00  from holding CSX Corporation or generate 28.92% return on investment over 90 days.

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

MTR Limited  vs.  CSX Corp.

MTR Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MTR Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MTRLimited is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CSX Corporation

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CSX Corporation are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CSX reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MTRLimited and CSX

The main advantage of trading using opposite MTRLimited and CSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTRLimited 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 MTR Limited 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.