Correlation Between Dana and X FAB
Can any of the company-specific risk be diversified away by investing in both Dana 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 Dana and X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dana Inc and X FAB Silicon Foundries, you can compare the effects of market volatilities on Dana 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 Dana with a short position of X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana and X FAB.
Diversification Opportunities for Dana and X FAB
Poor diversification
The 3 months correlation between Dana and XFB is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dana Inc 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 Dana 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 Dana Inc 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 Dana i.e., Dana and X FAB go up and down completely randomly.
Pair Corralation between Dana and X FAB
Assuming the 90 days horizon Dana Inc is expected to generate 1.15 times more return on investment than X FAB. However, Dana is 1.15 times more volatile than X FAB Silicon Foundries. It trades about 0.0 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.02 per unit of risk. If you would invest 1,455 in Dana Inc on October 20, 2024 and sell it today you would lose (215.00) from holding Dana Inc or give up 14.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dana Inc vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Dana Inc |
| X FAB Silicon |
Dana and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dana and X FAB
The main advantage of trading using opposite Dana and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana 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.The idea behind Dana Inc and X FAB Silicon Foundries 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.| X FAB vs. DELTA AIR LINES | X FAB vs. Grupo Carso SAB | X FAB vs. Sunny Optical Technology | X FAB vs. Cars Inc |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |