Correlation Between X-FAB Silicon and Ecolab
Can any of the company-specific risk be diversified away by investing in both X-FAB Silicon and Ecolab 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 X-FAB Silicon and Ecolab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X FAB Silicon Foundries and Ecolab Inc, you can compare the effects of market volatilities on X-FAB Silicon and Ecolab 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 X-FAB Silicon with a short position of Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of X-FAB Silicon and Ecolab.
Diversification Opportunities for X-FAB Silicon and Ecolab
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between X-FAB and Ecolab is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and X-FAB Silicon 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 X FAB Silicon Foundries are associated (or correlated) with Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Ecolab go up and down completely randomly.
Pair Corralation between X-FAB Silicon and Ecolab
Assuming the 90 days horizon X FAB Silicon Foundries is expected to under-perform the Ecolab. In addition to that, X-FAB Silicon is 2.33 times more volatile than Ecolab Inc. It trades about -0.11 of its total potential returns per unit of risk. Ecolab Inc is currently generating about 0.06 per unit of volatility. If you would invest 22,051 in Ecolab Inc on August 25, 2024 and sell it today you would earn a total of 2,479 from holding Ecolab Inc or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Ecolab Inc
Performance |
| Timeline |
| X FAB Silicon |
| Ecolab Inc |
X-FAB Silicon and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X-FAB Silicon and Ecolab
The main advantage of trading using opposite X-FAB Silicon and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X-FAB Silicon position performs unexpectedly, Ecolab 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 Ecolab will offset losses from the drop in Ecolab's long position.| X-FAB Silicon vs. NVIDIA | X-FAB Silicon vs. Intel | X-FAB Silicon vs. Taiwan Semiconductor Manufacturing | X-FAB Silicon vs. Marvell Technology Group |
| Ecolab vs. Linde plc Ordinary | Ecolab vs. PPG Industries | Ecolab vs. Sherwin Williams Co | Ecolab vs. LyondellBasell Industries NV |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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