Correlation Between Brinks and CSX

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

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

Diversification Opportunities for Brinks and CSX

-0.46

Correlation Coefficient

Brinks  CSX

Very good diversification

The 3 months correlation between Brinks and CSX is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Brinks Company and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation and Brinks 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 Brinks Company 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 Brinks i.e., Brinks and CSX go up and down completely randomly.

Pair Corralation between Brinks and CSX

Considering the 90-day investment horizon Brinks Company is expected to generate 1.38 times more return on investment than CSX. However, Brinks is 1.38 times more volatile than CSX Corporation. It trades about 0.08 of its potential returns per unit of risk. CSX Corporation is currently generating about -0.29 per unit of risk. If you would invest  8,859  in Brinks Company on February 5, 2024 and sell it today you would earn a total of  199.00  from holding Brinks Company or generate 2.25% return on investment over 90 days.

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

Brinks Company  vs.  CSX Corp.

Brinks Company

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brinks Company are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Brinks displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Brinks and CSX

The main advantage of trading using opposite Brinks and CSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brinks 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 Brinks Company 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.