Correlation Between X FAB and Mueller Industries
Can any of the company-specific risk be diversified away by investing in both X FAB and Mueller Industries 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 Mueller Industries 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 Mueller Industries, you can compare the effects of market volatilities on X FAB and Mueller Industries 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 Mueller Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Mueller Industries.
Diversification Opportunities for X FAB and Mueller Industries
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XFB and Mueller is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Mueller Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mueller Industries 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 Mueller Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mueller Industries has no effect on the direction of X FAB i.e., X FAB and Mueller Industries go up and down completely randomly.
Pair Corralation between X FAB and Mueller Industries
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 1.27 times more return on investment than Mueller Industries. However, X FAB is 1.27 times more volatile than Mueller Industries. It trades about -0.02 of its potential returns per unit of risk. Mueller Industries is currently generating about -0.06 per unit of risk. If you would invest 507.00 in X FAB Silicon Foundries on November 7, 2024 and sell it today you would lose (9.00) from holding X FAB Silicon Foundries or give up 1.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Mueller Industries
Performance |
| Timeline |
| X FAB Silicon |
| Mueller Industries |
X FAB and Mueller Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Mueller Industries
The main advantage of trading using opposite X FAB and Mueller Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Mueller Industries 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 Mueller Industries will offset losses from the drop in Mueller Industries' long position.| X FAB vs. New China Life | X FAB vs. SBI Insurance Group | X FAB vs. Daito Trust Construction | X FAB vs. VIENNA INSURANCE GR |
| Mueller Industries vs. CN MODERN DAIRY | Mueller Industries vs. Major Drilling Group | Mueller Industries vs. United Natural Foods | Mueller Industries vs. Performance Food Group |
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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