Correlation Between X FAB and Transport International
Can any of the company-specific risk be diversified away by investing in both X FAB and Transport International 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 Transport International 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 Transport International Holdings, you can compare the effects of market volatilities on X FAB and Transport International 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 Transport International. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Transport International.
Diversification Opportunities for X FAB and Transport International
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between XFB and Transport is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Transport International Holdin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport International 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 Transport International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport International has no effect on the direction of X FAB i.e., X FAB and Transport International go up and down completely randomly.
Pair Corralation between X FAB and Transport International
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 4.49 times more return on investment than Transport International. However, X FAB is 4.49 times more volatile than Transport International Holdings. It trades about 0.13 of its potential returns per unit of risk. Transport International Holdings is currently generating about -0.07 per unit of risk. If you would invest 462.00 in X FAB Silicon Foundries on September 12, 2024 and sell it today you would earn a total of 39.00 from holding X FAB Silicon Foundries or generate 8.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Transport International Holdin
Performance |
| Timeline |
| X FAB Silicon |
| Transport International |
X FAB and Transport International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Transport International
The main advantage of trading using opposite X FAB and Transport International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Transport International 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 Transport International will offset losses from the drop in Transport International's long position.The idea behind X FAB Silicon Foundries and Transport International Holdings 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.| Transport International vs. CSX Corporation | Transport International vs. Westinghouse Air Brake | Transport International vs. Superior Plus Corp | Transport International vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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