Correlation Between X FAB and Global Net
Can any of the company-specific risk be diversified away by investing in both X FAB and Global Net 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 X FAB and Global Net into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X FAB Silicon Foundries and Global Net Lease, you can compare the effects of market volatilities on X FAB and Global Net 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 X FAB with a short position of Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Global Net.
Diversification Opportunities for X FAB and Global Net
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 0ROZ and Global is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease and X FAB 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 X FAB Silicon Foundries are associated (or correlated) with Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of X FAB i.e., X FAB and Global Net go up and down completely randomly.
Pair Corralation between X FAB and Global Net
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 5.43 times more return on investment than Global Net. However, X FAB is 5.43 times more volatile than Global Net Lease. It trades about 0.12 of its potential returns per unit of risk. Global Net Lease is currently generating about -0.17 per unit of risk. 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 |
X FAB Silicon Foundries vs. Global Net Lease
Performance |
| Timeline |
| X FAB Silicon |
| Global Net Lease |
X FAB and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Global Net
The main advantage of trading using opposite X FAB and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Global Net 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 Global Net will offset losses from the drop in Global Net's long position.| X FAB vs. Samsung Electronics Co | X FAB vs. Samsung Electronics Co | X FAB vs. Hyundai Motor | X FAB vs. Reliance Industries Ltd |
| Global Net vs. Samsung Electronics Co | Global Net vs. Samsung Electronics Co | Global Net vs. Hyundai Motor | Global Net 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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