Correlation Between X FAB and Titan Machinery
Can any of the company-specific risk be diversified away by investing in both X FAB and Titan Machinery 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 Titan Machinery 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 Titan Machinery, you can compare the effects of market volatilities on X FAB and Titan Machinery 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 Titan Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Titan Machinery.
Diversification Opportunities for X FAB and Titan Machinery
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XFB and Titan is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery 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 Titan Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Machinery has no effect on the direction of X FAB i.e., X FAB and Titan Machinery go up and down completely randomly.
Pair Corralation between X FAB and Titan Machinery
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 0.74 times more return on investment than Titan Machinery. However, X FAB Silicon Foundries is 1.36 times less risky than Titan Machinery. It trades about -0.02 of its potential returns per unit of risk. Titan Machinery is currently generating about -0.04 per unit of risk. If you would invest 764.00 in X FAB Silicon Foundries on October 16, 2024 and sell it today you would lose (263.00) from holding X FAB Silicon Foundries or give up 34.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Titan Machinery
Performance |
| Timeline |
| X FAB Silicon |
| Titan Machinery |
X FAB and Titan Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Titan Machinery
The main advantage of trading using opposite X FAB and Titan Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Titan Machinery 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 Titan Machinery will offset losses from the drop in Titan Machinery's long position.| X FAB vs. CHRYSALIS INVESTMENTS LTD | X FAB vs. JLF INVESTMENT | X FAB vs. Playa Hotels Resorts | X FAB vs. Hyatt Hotels |
| Titan Machinery vs. X FAB Silicon Foundries | Titan Machinery vs. SEI INVESTMENTS | Titan Machinery vs. British American Tobacco | Titan Machinery vs. Alfa Financial Software |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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