Correlation Between Seven West and X FAB
Can any of the company-specific risk be diversified away by investing in both Seven West 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 Seven West and X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seven West Media and X FAB Silicon Foundries, you can compare the effects of market volatilities on Seven West 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 Seven West with a short position of X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven West and X FAB.
Diversification Opportunities for Seven West and X FAB
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Seven and XFB is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media 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 Seven West 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 Seven West Media 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 Seven West i.e., Seven West and X FAB go up and down completely randomly.
Pair Corralation between Seven West and X FAB
Assuming the 90 days horizon Seven West Media is expected to generate 2.61 times more return on investment than X FAB. However, Seven West is 2.61 times more volatile than X FAB Silicon Foundries. It trades about 0.1 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about 0.06 per unit of risk. If you would invest 7.90 in Seven West Media on October 11, 2024 and sell it today you would earn a total of 0.75 from holding Seven West Media or generate 9.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seven West Media vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Seven West Media |
| X FAB Silicon |
Seven West and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seven West and X FAB
The main advantage of trading using opposite Seven West and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven West 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.| Seven West vs. SEALED AIR | Seven West vs. Tsingtao Brewery | Seven West vs. National Beverage Corp | Seven West vs. Altair Engineering |
| X FAB vs. Comba Telecom Systems | X FAB vs. PARKEN Sport Entertainment | X FAB vs. Tencent Music Entertainment | X FAB vs. Seven West Media |
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 Stocks Directory module to find actively traded stocks across global markets.
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