Correlation Between X FAB and ServiceNow
Can any of the company-specific risk be diversified away by investing in both X FAB and ServiceNow 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 ServiceNow 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 ServiceNow, you can compare the effects of market volatilities on X FAB and ServiceNow 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 ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and ServiceNow.
Diversification Opportunities for X FAB and ServiceNow
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between XFB and ServiceNow is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow 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 ServiceNow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServiceNow has no effect on the direction of X FAB i.e., X FAB and ServiceNow go up and down completely randomly.
Pair Corralation between X FAB and ServiceNow
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 0.86 times more return on investment than ServiceNow. However, X FAB Silicon Foundries is 1.16 times less risky than ServiceNow. It trades about -0.02 of its potential returns per unit of risk. ServiceNow is currently generating about -0.07 per unit of risk. If you would invest 507.00 in X FAB Silicon Foundries on November 7, 2024 and sell it today you would lose (9.00) from holding X FAB Silicon Foundries or give up 1.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. ServiceNow
Performance |
| Timeline |
| X FAB Silicon |
| ServiceNow |
X FAB and ServiceNow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and ServiceNow
The main advantage of trading using opposite X FAB and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, ServiceNow 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 ServiceNow will offset losses from the drop in ServiceNow's long position.| X FAB vs. New China Life | X FAB vs. SBI Insurance Group | X FAB vs. Daito Trust Construction | X FAB vs. VIENNA INSURANCE GR |
| ServiceNow vs. MCEWEN MINING INC | ServiceNow vs. GALENA MINING LTD | ServiceNow vs. Canadian Utilities Limited | ServiceNow vs. Highlight Communications AG |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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