Correlation Between Norfolk Southern and Greenbrier Companies

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

By analyzing existing cross correlation between Norfolk Southern and Greenbrier Companies, you can compare the effects of market volatilities on Norfolk Southern and Greenbrier Companies 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 Greenbrier Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norfolk Southern and Greenbrier Companies.

Diversification Opportunities for Norfolk Southern and Greenbrier Companies

0.51

Correlation Coefficient

Norfolk Southern  Greenbrier Companies

Very weak diversification

The 3 months correlation between Norfolk and Greenbrier is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Norfolk Southern and Greenbrier Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenbrier Companies 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 Greenbrier Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenbrier Companies has no effect on the direction of Norfolk Southern i.e., Norfolk Southern and Greenbrier Companies go up and down completely randomly.

Pair Corralation between Norfolk Southern and Greenbrier Companies

Considering the 90-day investment horizon Norfolk Southern is expected to generate 0.44 times more return on investment than Greenbrier Companies. However, Norfolk Southern is 2.28 times less risky than Greenbrier Companies. It trades about 0.28 of its potential returns per unit of risk. Greenbrier Companies is currently generating about 0.03 per unit of risk. If you would invest  21,891  in Norfolk Southern on May 7, 2025 and sell it today you would earn a total of  5,921  from holding Norfolk Southern or generate 27.05% return on investment over 90 days.

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

Norfolk Southern  vs.  Greenbrier Companies

Norfolk Southern

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Norfolk Southern are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Norfolk Southern exhibited solid returns over the last few months and may actually be approaching a breakup point.

Greenbrier Companies

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Greenbrier Companies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Greenbrier Companies may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Norfolk Southern and Greenbrier Companies

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

The idea behind Norfolk Southern and Greenbrier Companies 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.