Correlation Between Power Metal and X FAB
Can any of the company-specific risk be diversified away by investing in both Power Metal 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 Power Metal and X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Metal Resources and X FAB Silicon Foundries, you can compare the effects of market volatilities on Power Metal 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 Power Metal with a short position of X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Metal and X FAB.
Diversification Opportunities for Power Metal and X FAB
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Power and 0ROZ is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Power Metal Resources 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 Power Metal 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 Power Metal Resources 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 Power Metal i.e., Power Metal and X FAB go up and down completely randomly.
Pair Corralation between Power Metal and X FAB
Assuming the 90 days trading horizon Power Metal Resources is expected to generate 1.87 times more return on investment than X FAB. However, Power Metal is 1.87 times more volatile than X FAB Silicon Foundries. It trades about 0.17 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 1,300 in Power Metal Resources on September 4, 2024 and sell it today you would earn a total of 213.00 from holding Power Metal Resources or generate 16.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Metal Resources vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Power Metal Resources |
| X FAB Silicon |
Power Metal and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Metal and X FAB
The main advantage of trading using opposite Power Metal and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Metal 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.| Power Metal vs. X FAB Silicon Foundries | Power Metal vs. Sabre Insurance Group | Power Metal vs. Bytes Technology | Power Metal vs. JB Hunt Transport |
| X FAB vs. Samsung Electronics Co | X FAB vs. Samsung Electronics Co | X FAB vs. Hyundai Motor | X FAB vs. Toyota Motor Corp |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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