Correlation Between CDL INVESTMENT and X FAB
Can any of the company-specific risk be diversified away by investing in both CDL INVESTMENT 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 CDL INVESTMENT and X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDL INVESTMENT and X FAB Silicon Foundries, you can compare the effects of market volatilities on CDL INVESTMENT 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 CDL INVESTMENT with a short position of X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDL INVESTMENT and X FAB.
Diversification Opportunities for CDL INVESTMENT and X FAB
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CDL and XFB is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding CDL INVESTMENT 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 CDL INVESTMENT 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 CDL INVESTMENT 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 CDL INVESTMENT i.e., CDL INVESTMENT and X FAB go up and down completely randomly.
Pair Corralation between CDL INVESTMENT and X FAB
Assuming the 90 days trading horizon CDL INVESTMENT is expected to generate 0.77 times more return on investment than X FAB. However, CDL INVESTMENT is 1.29 times less risky than X FAB. It trades about 0.03 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.05 per unit of risk. If you would invest 41.00 in CDL INVESTMENT on September 24, 2024 and sell it today you would earn a total of 3.00 from holding CDL INVESTMENT or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDL INVESTMENT vs. X FAB Silicon Foundries
Performance |
| Timeline |
| CDL INVESTMENT |
| X FAB Silicon |
CDL INVESTMENT and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDL INVESTMENT and X FAB
The main advantage of trading using opposite CDL INVESTMENT and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDL INVESTMENT 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.| CDL INVESTMENT vs. Apple Inc | CDL INVESTMENT vs. Apple Inc | CDL INVESTMENT vs. Apple Inc | CDL INVESTMENT vs. Apple 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.
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