Correlation Between X FAB and Clearway Energy
Can any of the company-specific risk be diversified away by investing in both X FAB and Clearway 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 Clearway 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 Clearway Energy, you can compare the effects of market volatilities on X FAB and Clearway 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 Clearway Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Clearway Energy.
Diversification Opportunities for X FAB and Clearway Energy
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between XFB and Clearway is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Clearway Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearway 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 Clearway Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearway Energy has no effect on the direction of X FAB i.e., X FAB and Clearway Energy go up and down completely randomly.
Pair Corralation between X FAB and Clearway Energy
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Clearway Energy. In addition to that, X FAB is 1.24 times more volatile than Clearway Energy. It trades about -0.01 of its total potential returns per unit of risk. Clearway Energy is currently generating about 0.01 per unit of volatility. If you would invest 2,607 in Clearway Energy on September 19, 2024 and sell it today you would lose (74.00) from holding Clearway Energy or give up 2.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Clearway Energy
Performance |
| Timeline |
| X FAB Silicon |
| Clearway Energy |
X FAB and Clearway Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Clearway Energy
The main advantage of trading using opposite X FAB and Clearway Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Clearway 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 Clearway Energy will offset losses from the drop in Clearway Energy's long position.The idea behind X FAB Silicon Foundries and Clearway Energy 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.| Clearway Energy vs. Verizon Communications | Clearway Energy vs. Consolidated Communications Holdings | Clearway Energy vs. Zoom Video Communications | Clearway Energy vs. GALENA MINING LTD |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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