Correlation Between X FAB and SIERRA METALS
Can any of the company-specific risk be diversified away by investing in both X FAB and SIERRA 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 SIERRA 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 SIERRA METALS, you can compare the effects of market volatilities on X FAB and SIERRA 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 SIERRA METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and SIERRA METALS.
Diversification Opportunities for X FAB and SIERRA METALS
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between XFB and SIERRA is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and SIERRA METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIERRA 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 SIERRA METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIERRA METALS has no effect on the direction of X FAB i.e., X FAB and SIERRA METALS go up and down completely randomly.
Pair Corralation between X FAB and SIERRA METALS
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the SIERRA METALS. But the stock apears to be less risky and, when comparing its historical volatility, X FAB Silicon Foundries is 1.91 times less risky than SIERRA METALS. The stock trades about -0.03 of its potential returns per unit of risk. The SIERRA METALS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 29.00 in SIERRA METALS on October 25, 2024 and sell it today you would earn a total of 30.00 from holding SIERRA METALS or generate 103.45% 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. SIERRA METALS
Performance |
| Timeline |
| X FAB Silicon |
| SIERRA METALS |
X FAB and SIERRA METALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and SIERRA METALS
The main advantage of trading using opposite X FAB and SIERRA METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, SIERRA 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 SIERRA METALS will offset losses from the drop in SIERRA METALS's long position.| X FAB vs. BOSTON BEER A | X FAB vs. Thai Beverage Public | X FAB vs. China Communications Services | X FAB vs. Molson Coors Beverage |
| SIERRA METALS vs. Apple Inc | SIERRA METALS vs. Apple Inc | SIERRA METALS vs. Apple Inc | SIERRA METALS 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |