Correlation Between X-FAB Silicon and Nabors Industries
Can any of the company-specific risk be diversified away by investing in both X-FAB Silicon and Nabors Industries 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 Nabors Industries 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 Nabors Industries, you can compare the effects of market volatilities on X-FAB Silicon and Nabors Industries 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 Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of X-FAB Silicon and Nabors Industries.
Diversification Opportunities for X-FAB Silicon and Nabors Industries
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between X-FAB and Nabors is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries 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 Nabors Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Industries has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Nabors Industries go up and down completely randomly.
Pair Corralation between X-FAB Silicon and Nabors Industries
Assuming the 90 days horizon X FAB Silicon Foundries is expected to under-perform the Nabors Industries. But the pink sheet apears to be less risky and, when comparing its historical volatility, X FAB Silicon Foundries is 1.32 times less risky than Nabors Industries. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Nabors Industries is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 7,430 in Nabors Industries on November 9, 2024 and sell it today you would lose (1,998) from holding Nabors Industries or give up 26.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Nabors Industries
Performance |
| Timeline |
| X FAB Silicon |
| Nabors Industries |
X-FAB Silicon and Nabors Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X-FAB Silicon and Nabors Industries
The main advantage of trading using opposite X-FAB Silicon and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X-FAB Silicon position performs unexpectedly, Nabors Industries 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 Nabors Industries will offset losses from the drop in Nabors Industries' 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 |
| Nabors Industries vs. Helmerich and Payne | Nabors Industries vs. Precision Drilling | Nabors Industries vs. Seadrill Limited | Nabors Industries vs. Borr Drilling |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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