Correlation Between X FAB and FuelCell Energy
Can any of the company-specific risk be diversified away by investing in both X FAB and FuelCell 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 FuelCell 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 FuelCell Energy, you can compare the effects of market volatilities on X FAB and FuelCell 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 FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and FuelCell Energy.
Diversification Opportunities for X FAB and FuelCell Energy
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between XFB and FuelCell is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy 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 FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of X FAB i.e., X FAB and FuelCell Energy go up and down completely randomly.
Pair Corralation between X FAB and FuelCell Energy
Assuming the 90 days trading horizon X FAB is expected to generate 2.01 times less return on investment than FuelCell Energy. But when comparing it to its historical volatility, X FAB Silicon Foundries is 2.84 times less risky than FuelCell Energy. It trades about 0.07 of its potential returns per unit of risk. FuelCell Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,116 in FuelCell Energy on October 14, 2024 and sell it today you would earn a total of 14.00 from holding FuelCell Energy or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. FuelCell Energy
Performance |
| Timeline |
| X FAB Silicon |
| FuelCell Energy |
X FAB and FuelCell Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and FuelCell Energy
The main advantage of trading using opposite X FAB and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, FuelCell 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 FuelCell Energy will offset losses from the drop in FuelCell Energy's long position.| X FAB vs. CENTURIA OFFICE REIT | X FAB vs. 24SEVENOFFICE GROUP AB | X FAB vs. NURAN WIRELESS INC | X FAB vs. INDO RAMA SYNTHETIC |
| FuelCell Energy vs. INTERSHOP Communications Aktiengesellschaft | FuelCell Energy vs. EBRO FOODS | FuelCell Energy vs. Shenandoah Telecommunications | FuelCell Energy vs. SENECA FOODS A |
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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