Correlation Between X FAB and CDL INVESTMENT
Can any of the company-specific risk be diversified away by investing in both X FAB and CDL INVESTMENT 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 CDL INVESTMENT 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 CDL INVESTMENT, you can compare the effects of market volatilities on X FAB and CDL INVESTMENT 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 CDL INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and CDL INVESTMENT.
Diversification Opportunities for X FAB and CDL INVESTMENT
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between XFB and CDL is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and CDL INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDL INVESTMENT 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 CDL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDL INVESTMENT has no effect on the direction of X FAB i.e., X FAB and CDL INVESTMENT go up and down completely randomly.
Pair Corralation between X FAB and CDL INVESTMENT
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the CDL INVESTMENT. In addition to that, X FAB is 1.29 times more volatile than CDL INVESTMENT. It trades about -0.05 of its total potential returns per unit of risk. CDL INVESTMENT is currently generating about 0.03 per unit of volatility. If you would invest 41.00 in CDL INVESTMENT on September 24, 2024 and sell it today you would earn a total of 3.00 from holding CDL INVESTMENT or generate 7.32% 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. CDL INVESTMENT
Performance |
| Timeline |
| X FAB Silicon |
| CDL INVESTMENT |
X FAB and CDL INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and CDL INVESTMENT
The main advantage of trading using opposite X FAB and CDL INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, CDL INVESTMENT 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 CDL INVESTMENT will offset losses from the drop in CDL INVESTMENT's long position.The idea behind X FAB Silicon Foundries and CDL INVESTMENT pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CDL INVESTMENT vs. Apple Inc | CDL INVESTMENT vs. Apple Inc | CDL INVESTMENT vs. Apple Inc | CDL INVESTMENT 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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