Correlation Between Global Net and X FAB
Can any of the company-specific risk be diversified away by investing in both Global Net and X FAB 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 Global Net and X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Net Lease and X FAB Silicon Foundries, you can compare the effects of market volatilities on Global Net and X FAB 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 Global Net with a short position of X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and X FAB.
Diversification Opportunities for Global Net and X FAB
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and 0ROZ is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon and Global Net 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 Global Net Lease are associated (or correlated) with X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Global Net i.e., Global Net and X FAB go up and down completely randomly.
Pair Corralation between Global Net and X FAB
Assuming the 90 days trading horizon Global Net Lease is expected to under-perform the X FAB. But the stock apears to be less risky and, when comparing its historical volatility, Global Net Lease is 5.43 times less risky than X FAB. The stock trades about -0.17 of its potential returns per unit of risk. The X FAB Silicon Foundries is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 491.00 in X FAB Silicon Foundries on September 12, 2024 and sell it today you would earn a total of 309.00 from holding X FAB Silicon Foundries or generate 62.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Net Lease vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Global Net Lease |
| X FAB Silicon |
Global Net and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Net and X FAB
The main advantage of trading using opposite Global Net and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB's long position.| Global Net vs. Samsung Electronics Co | Global Net vs. Samsung Electronics Co | Global Net vs. Hyundai Motor | Global Net vs. Reliance Industries Ltd |
| X FAB vs. Samsung Electronics Co | X FAB vs. Samsung Electronics Co | X FAB vs. Hyundai Motor | X FAB vs. Reliance Industries Ltd |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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