Correlation Between X FAB and Siemens Energy
Can any of the company-specific risk be diversified away by investing in both X FAB and Siemens Energy 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 Siemens Energy 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 Siemens Energy AG, you can compare the effects of market volatilities on X FAB and Siemens Energy 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 Siemens Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Siemens Energy.
Diversification Opportunities for X FAB and Siemens Energy
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between XFB and Siemens is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Siemens Energy AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Energy AG 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 Siemens Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Energy AG has no effect on the direction of X FAB i.e., X FAB and Siemens Energy go up and down completely randomly.
Pair Corralation between X FAB and Siemens Energy
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 0.96 times more return on investment than Siemens Energy. However, X FAB Silicon Foundries is 1.04 times less risky than Siemens Energy. It trades about 0.1 of its potential returns per unit of risk. Siemens Energy AG is currently generating about -0.03 per unit of risk. If you would invest 488.00 in X FAB Silicon Foundries on October 22, 2024 and sell it today you would earn a total of 22.00 from holding X FAB Silicon Foundries or generate 4.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.12% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Siemens Energy AG
Performance |
| Timeline |
| X FAB Silicon |
| Siemens Energy AG |
X FAB and Siemens Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Siemens Energy
The main advantage of trading using opposite X FAB and Siemens Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Siemens Energy 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 Siemens Energy will offset losses from the drop in Siemens Energy's long position.The idea behind X FAB Silicon Foundries and Siemens Energy AG 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.| Siemens Energy vs. Liberty Broadband | Siemens Energy vs. Highlight Communications AG | Siemens Energy vs. DICKS Sporting Goods | Siemens Energy vs. Shenandoah Telecommunications |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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