Correlation Between X FAB and Nomura Holdings
Can any of the company-specific risk be diversified away by investing in both X FAB and Nomura Holdings 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 Nomura Holdings 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 Nomura Holdings, you can compare the effects of market volatilities on X FAB and Nomura Holdings 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 Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Nomura Holdings.
Diversification Opportunities for X FAB and Nomura Holdings
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XFB and Nomura is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Nomura Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings 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 Nomura Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Holdings has no effect on the direction of X FAB i.e., X FAB and Nomura Holdings go up and down completely randomly.
Pair Corralation between X FAB and Nomura Holdings
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 1.93 times more return on investment than Nomura Holdings. However, X FAB is 1.93 times more volatile than Nomura Holdings. It trades about 0.15 of its potential returns per unit of risk. Nomura Holdings is currently generating about -0.16 per unit of risk. If you would invest 435.00 in X FAB Silicon Foundries on September 24, 2024 and sell it today you would earn a total of 41.00 from holding X FAB Silicon Foundries or generate 9.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Nomura Holdings
Performance |
| Timeline |
| X FAB Silicon |
| Nomura Holdings |
X FAB and Nomura Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Nomura Holdings
The main advantage of trading using opposite X FAB and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Nomura Holdings 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 Nomura Holdings will offset losses from the drop in Nomura Holdings' long position.The idea behind X FAB Silicon Foundries and Nomura 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.| Nomura Holdings vs. PKSHA TECHNOLOGY INC | Nomura Holdings vs. X FAB Silicon Foundries | Nomura Holdings vs. ALERION CLEANPOWER | Nomura Holdings vs. SUN ART RETAIL |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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