Correlation Between X FAB and Gladstone Investment
Can any of the company-specific risk be diversified away by investing in both X FAB and Gladstone Investment 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 and Gladstone Investment 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 Gladstone Investment, you can compare the effects of market volatilities on X FAB and Gladstone Investment 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 with a short position of Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Gladstone Investment.
Diversification Opportunities for X FAB and Gladstone Investment
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between XFB and Gladstone is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and X FAB 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 Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of X FAB i.e., X FAB and Gladstone Investment go up and down completely randomly.
Pair Corralation between X FAB and Gladstone Investment
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Gladstone Investment. In addition to that, X FAB is 1.63 times more volatile than Gladstone Investment. It trades about -0.05 of its total potential returns per unit of risk. Gladstone Investment is currently generating about 0.02 per unit of volatility. If you would invest 1,191 in Gladstone Investment on September 24, 2024 and sell it today you would earn a total of 52.00 from holding Gladstone Investment or generate 4.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Gladstone Investment
Performance |
| Timeline |
| X FAB Silicon |
| Gladstone Investment |
X FAB and Gladstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Gladstone Investment
The main advantage of trading using opposite X FAB and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Gladstone Investment 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 Gladstone Investment will offset losses from the drop in Gladstone Investment's long position.The idea behind X FAB Silicon Foundries and Gladstone Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Gladstone Investment vs. Corporate Travel Management | Gladstone Investment vs. FUYO GENERAL LEASE | Gladstone Investment vs. Air Lease | Gladstone Investment vs. STORE ELECTRONIC |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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