Correlation Between Air Products and X-FAB Silicon
Can any of the company-specific risk be diversified away by investing in both Air Products and X-FAB Silicon 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 Air Products and X-FAB Silicon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products and and X FAB Silicon Foundries, you can compare the effects of market volatilities on Air Products and X-FAB Silicon 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 Air Products with a short position of X-FAB Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and X-FAB Silicon.
Diversification Opportunities for Air Products and X-FAB Silicon
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and X-FAB is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and 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 Air Products 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 Air Products and are associated (or correlated) with X-FAB Silicon. 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 Air Products i.e., Air Products and X-FAB Silicon go up and down completely randomly.
Pair Corralation between Air Products and X-FAB Silicon
Considering the 90-day investment horizon Air Products and is expected to generate 0.32 times more return on investment than X-FAB Silicon. However, Air Products and is 3.14 times less risky than X-FAB Silicon. It trades about 0.23 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.29 per unit of risk. If you would invest 31,826 in Air Products and on August 29, 2024 and sell it today you would earn a total of 1,652 from holding Air Products and or generate 5.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Air Products |
| X FAB Silicon |
Air Products and X-FAB Silicon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and X-FAB Silicon
The main advantage of trading using opposite Air Products and X-FAB Silicon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, X-FAB Silicon 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 Silicon will offset losses from the drop in X-FAB Silicon's long position.| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
| X-FAB Silicon vs. NVIDIA | X-FAB Silicon vs. Intel | X-FAB Silicon vs. Taiwan Semiconductor Manufacturing | X-FAB Silicon vs. Marvell Technology Group |
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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