Correlation Between X-FAB Silicon and SBA Communications
Can any of the company-specific risk be diversified away by investing in both X-FAB Silicon and SBA Communications 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 SBA Communications 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 SBA Communications Corp, you can compare the effects of market volatilities on X-FAB Silicon and SBA Communications 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 SBA Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of X-FAB Silicon and SBA Communications.
Diversification Opportunities for X-FAB Silicon and SBA Communications
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between X-FAB and SBA is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and SBA Communications Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBA Communications Corp 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 SBA Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBA Communications Corp has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and SBA Communications go up and down completely randomly.
Pair Corralation between X-FAB Silicon and SBA Communications
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 1.48 times more return on investment than SBA Communications. However, X-FAB Silicon is 1.48 times more volatile than SBA Communications Corp. It trades about 0.07 of its potential returns per unit of risk. SBA Communications Corp is currently generating about 0.08 per unit of risk. If you would invest 435.00 in X FAB Silicon Foundries on September 1, 2024 and sell it today you would earn a total of 15.00 from holding X FAB Silicon Foundries or generate 3.45% 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. SBA Communications Corp
Performance |
| Timeline |
| X FAB Silicon |
| SBA Communications Corp |
X-FAB Silicon and SBA Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X-FAB Silicon and SBA Communications
The main advantage of trading using opposite X-FAB Silicon and SBA Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X-FAB Silicon position performs unexpectedly, SBA Communications 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 SBA Communications will offset losses from the drop in SBA Communications' long position.| X-FAB Silicon vs. Apple Inc | X-FAB Silicon vs. Apple Inc | X-FAB Silicon vs. Apple Inc | X-FAB Silicon vs. Apple Inc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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