Correlation Between X FAB and MBANK
Can any of the company-specific risk be diversified away by investing in both X FAB and MBANK 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 MBANK 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 MBANK, you can compare the effects of market volatilities on X FAB and MBANK 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 MBANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and MBANK.
Diversification Opportunities for X FAB and MBANK
Modest diversification
The 3 months correlation between XFB and MBANK is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and MBANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBANK 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 MBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBANK has no effect on the direction of X FAB i.e., X FAB and MBANK go up and down completely randomly.
Pair Corralation between X FAB and MBANK
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 1.36 times more return on investment than MBANK. However, X FAB is 1.36 times more volatile than MBANK. It trades about -0.01 of its potential returns per unit of risk. MBANK is currently generating about -0.01 per unit of risk. If you would invest 517.00 in X FAB Silicon Foundries on November 2, 2024 and sell it today you would lose (34.00) from holding X FAB Silicon Foundries or give up 6.58% of portfolio value 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. MBANK
Performance |
| Timeline |
| X FAB Silicon |
| MBANK |
X FAB and MBANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and MBANK
The main advantage of trading using opposite X FAB and MBANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, MBANK 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 MBANK will offset losses from the drop in MBANK's long position.| X FAB vs. ATOSS SOFTWARE | X FAB vs. GBS Software AG | X FAB vs. Check Point Software | X FAB vs. OPKO HEALTH |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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