Correlation Between X FAB and JAPAN AIRLINES
Can any of the company-specific risk be diversified away by investing in both X FAB and JAPAN AIRLINES 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 JAPAN AIRLINES 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 JAPAN AIRLINES, you can compare the effects of market volatilities on X FAB and JAPAN AIRLINES 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 JAPAN AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and JAPAN AIRLINES.
Diversification Opportunities for X FAB and JAPAN AIRLINES
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between XFB and JAPAN is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and JAPAN AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN AIRLINES 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 JAPAN AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN AIRLINES has no effect on the direction of X FAB i.e., X FAB and JAPAN AIRLINES go up and down completely randomly.
Pair Corralation between X FAB and JAPAN AIRLINES
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 2.58 times more return on investment than JAPAN AIRLINES. However, X FAB is 2.58 times more volatile than JAPAN AIRLINES. It trades about 0.06 of its potential returns per unit of risk. JAPAN AIRLINES is currently generating about 0.14 per unit of risk. If you would invest 483.00 in X FAB Silicon Foundries on November 4, 2024 and sell it today you would earn a total of 15.00 from holding X FAB Silicon Foundries or generate 3.11% 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. JAPAN AIRLINES
Performance |
| Timeline |
| X FAB Silicon |
| JAPAN AIRLINES |
X FAB and JAPAN AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and JAPAN AIRLINES
The main advantage of trading using opposite X FAB and JAPAN AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, JAPAN AIRLINES 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 JAPAN AIRLINES will offset losses from the drop in JAPAN AIRLINES's long position.The idea behind X FAB Silicon Foundries and JAPAN AIRLINES 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.| JAPAN AIRLINES vs. TRADEDOUBLER AB SK | JAPAN AIRLINES vs. BJs Wholesale Club | JAPAN AIRLINES vs. Costco Wholesale Corp | JAPAN AIRLINES vs. Fast Retailing Co |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |