Correlation Between REINET INVESTMENTS and X FAB
Can any of the company-specific risk be diversified away by investing in both REINET INVESTMENTS 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 REINET INVESTMENTS and X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REINET INVESTMENTS SCA and X FAB Silicon Foundries, you can compare the effects of market volatilities on REINET INVESTMENTS 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 REINET INVESTMENTS with a short position of X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of REINET INVESTMENTS and X FAB.
Diversification Opportunities for REINET INVESTMENTS and X FAB
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between REINET and XFB is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding REINET INVESTMENTS SCA 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 REINET INVESTMENTS 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 REINET INVESTMENTS SCA 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 REINET INVESTMENTS i.e., REINET INVESTMENTS and X FAB go up and down completely randomly.
Pair Corralation between REINET INVESTMENTS and X FAB
Assuming the 90 days horizon REINET INVESTMENTS SCA is expected to generate 0.86 times more return on investment than X FAB. However, REINET INVESTMENTS SCA is 1.16 times less risky than X FAB. It trades about 0.02 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.04 per unit of risk. If you would invest 2,266 in REINET INVESTMENTS SCA on September 26, 2024 and sell it today you would earn a total of 54.00 from holding REINET INVESTMENTS SCA or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REINET INVESTMENTS SCA vs. X FAB Silicon Foundries
Performance |
| Timeline |
| REINET INVESTMENTS SCA |
| X FAB Silicon |
REINET INVESTMENTS and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REINET INVESTMENTS and X FAB
The main advantage of trading using opposite REINET INVESTMENTS and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REINET INVESTMENTS 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.| REINET INVESTMENTS vs. Blackstone Group | REINET INVESTMENTS vs. The Bank of | REINET INVESTMENTS vs. Ameriprise Financial | REINET INVESTMENTS vs. State Street |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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