Correlation Between X FAB and Air Canada
Can any of the company-specific risk be diversified away by investing in both X FAB and Air Canada 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 Air Canada 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 Air Canada, you can compare the effects of market volatilities on X FAB and Air Canada 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 Air Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Air Canada.
Diversification Opportunities for X FAB and Air Canada
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XFB and Air is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada 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 Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of X FAB i.e., X FAB and Air Canada go up and down completely randomly.
Pair Corralation between X FAB and Air Canada
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 1.06 times more return on investment than Air Canada. However, X FAB is 1.06 times more volatile than Air Canada. It trades about 0.01 of its potential returns per unit of risk. Air Canada is currently generating about -0.29 per unit of risk. If you would invest 500.00 in X FAB Silicon Foundries on October 17, 2024 and sell it today you would lose (2.00) from holding X FAB Silicon Foundries or give up 0.4% 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. Air Canada
Performance |
| Timeline |
| X FAB Silicon |
| Air Canada |
X FAB and Air Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Air Canada
The main advantage of trading using opposite X FAB and Air Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Air Canada 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 Air Canada will offset losses from the drop in Air Canada's long position.| X FAB vs. Gaztransport Technigaz SA | X FAB vs. SCIENCE IN SPORT | X FAB vs. Air Transport Services | X FAB vs. Fukuyama Transporting Co |
| Air Canada vs. X FAB Silicon Foundries | Air Canada vs. Take Two Interactive Software | Air Canada vs. Pure Storage | Air Canada vs. SILVER BULLET DATA |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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