Correlation Between X FAB and DISTRICT METALS
Can any of the company-specific risk be diversified away by investing in both X FAB and DISTRICT METALS 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 DISTRICT METALS 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 DISTRICT METALS, you can compare the effects of market volatilities on X FAB and DISTRICT METALS 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 DISTRICT METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and DISTRICT METALS.
Diversification Opportunities for X FAB and DISTRICT METALS
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between XFB and DISTRICT is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and DISTRICT METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DISTRICT METALS 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 DISTRICT METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DISTRICT METALS has no effect on the direction of X FAB i.e., X FAB and DISTRICT METALS go up and down completely randomly.
Pair Corralation between X FAB and DISTRICT METALS
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the DISTRICT METALS. But the stock apears to be less risky and, when comparing its historical volatility, X FAB Silicon Foundries is 3.4 times less risky than DISTRICT METALS. The stock trades about -0.02 of its potential returns per unit of risk. The DISTRICT METALS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6.51 in DISTRICT METALS on October 11, 2024 and sell it today you would earn a total of 19.49 from holding DISTRICT METALS or generate 299.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. DISTRICT METALS
Performance |
| Timeline |
| X FAB Silicon |
| DISTRICT METALS |
X FAB and DISTRICT METALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and DISTRICT METALS
The main advantage of trading using opposite X FAB and DISTRICT METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, DISTRICT METALS 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 DISTRICT METALS will offset losses from the drop in DISTRICT METALS's long position.| X FAB vs. Constellation Software | X FAB vs. CyberArk Software | X FAB vs. Daito Trust Construction | X FAB vs. WIMFARM SA EO |
| DISTRICT METALS vs. alstria office REIT AG | DISTRICT METALS vs. CENTURIA OFFICE REIT | DISTRICT METALS vs. Gruppo Mutuionline SpA | DISTRICT METALS vs. Tower One Wireless |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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