Correlation Between AECOM TECHNOLOGY and X Fab
Can any of the company-specific risk be diversified away by investing in both AECOM TECHNOLOGY 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 AECOM TECHNOLOGY and X Fab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AECOM TECHNOLOGY and X Fab Silicon, you can compare the effects of market volatilities on AECOM TECHNOLOGY 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 AECOM TECHNOLOGY with a short position of X Fab. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM TECHNOLOGY and X Fab.
Diversification Opportunities for AECOM TECHNOLOGY and X Fab
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AECOM and XFB is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY and X Fab Silicon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Fab Silicon and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY 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 AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and X Fab go up and down completely randomly.
Pair Corralation between AECOM TECHNOLOGY and X Fab
Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to generate 0.4 times more return on investment than X Fab. However, AECOM TECHNOLOGY is 2.5 times less risky than X Fab. It trades about -0.28 of its potential returns per unit of risk. X Fab Silicon is currently generating about -0.14 per unit of risk. If you would invest 8,825 in AECOM TECHNOLOGY on January 9, 2025 and sell it today you would lose (1,125) from holding AECOM TECHNOLOGY or give up 12.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AECOM TECHNOLOGY vs. X Fab Silicon
Performance |
| Timeline |
| AECOM TECHNOLOGY |
| X Fab Silicon |
AECOM TECHNOLOGY and X Fab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AECOM TECHNOLOGY and X Fab
The main advantage of trading using opposite AECOM TECHNOLOGY and X Fab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AECOM TECHNOLOGY 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.| AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Microsoft |
| X Fab vs. LANDSEA HOMES P | X Fab vs. bet at home AG | X Fab vs. American Homes 4 | X Fab vs. KENEDIX OFFICE INV |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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