Correlation Between X FAB and Shell Plc
Can any of the company-specific risk be diversified away by investing in both X FAB and Shell Plc 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 Shell Plc 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 Shell plc, you can compare the effects of market volatilities on X FAB and Shell Plc 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 Shell Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Shell Plc.
Diversification Opportunities for X FAB and Shell Plc
Average diversification
The 3 months correlation between 0ROZ and Shell is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Shell plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shell plc 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 Shell Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shell plc has no effect on the direction of X FAB i.e., X FAB and Shell Plc go up and down completely randomly.
Pair Corralation between X FAB and Shell Plc
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Shell Plc. In addition to that, X FAB is 2.02 times more volatile than Shell plc. It trades about -0.07 of its total potential returns per unit of risk. Shell plc is currently generating about 0.03 per unit of volatility. If you would invest 230,720 in Shell plc on August 31, 2024 and sell it today you would earn a total of 22,430 from holding Shell plc or generate 9.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.95% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Shell plc
Performance |
| Timeline |
| X FAB Silicon |
| Shell plc |
X FAB and Shell Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Shell Plc
The main advantage of trading using opposite X FAB and Shell Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Shell Plc 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 Shell Plc will offset losses from the drop in Shell Plc's long position.| X FAB vs. Neometals | X FAB vs. Coor Service Management | X FAB vs. Aeorema Communications Plc | X FAB vs. JLEN Environmental Assets |
| Shell Plc vs. Hansa Investment | Shell Plc vs. Beeks Trading | Shell Plc vs. Schroders Investment Trusts | Shell Plc vs. Molson Coors Beverage |
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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