Correlation Between X FAB and RenaissanceRe Holdings
Can any of the company-specific risk be diversified away by investing in both X FAB and RenaissanceRe 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 RenaissanceRe 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 RenaissanceRe Holdings, you can compare the effects of market volatilities on X FAB and RenaissanceRe 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 RenaissanceRe Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and RenaissanceRe Holdings.
Diversification Opportunities for X FAB and RenaissanceRe Holdings
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between XFB and RenaissanceRe is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and RenaissanceRe Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RenaissanceRe 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 RenaissanceRe Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RenaissanceRe Holdings has no effect on the direction of X FAB i.e., X FAB and RenaissanceRe Holdings go up and down completely randomly.
Pair Corralation between X FAB and RenaissanceRe Holdings
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 2.15 times more return on investment than RenaissanceRe Holdings. However, X FAB is 2.15 times more volatile than RenaissanceRe Holdings. It trades about 0.02 of its potential returns per unit of risk. RenaissanceRe Holdings is currently generating about 0.01 per unit of risk. If you would invest 500.00 in X FAB Silicon Foundries on October 29, 2024 and sell it today you would earn a total of 3.00 from holding X FAB Silicon Foundries or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. RenaissanceRe Holdings
Performance |
| Timeline |
| X FAB Silicon |
| RenaissanceRe Holdings |
X FAB and RenaissanceRe Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and RenaissanceRe Holdings
The main advantage of trading using opposite X FAB and RenaissanceRe Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, RenaissanceRe 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 RenaissanceRe Holdings will offset losses from the drop in RenaissanceRe Holdings' long position.| X FAB vs. GigaMedia | X FAB vs. SQUIRREL MEDIA SA | X FAB vs. TOREX SEMICONDUCTOR LTD | X FAB vs. MOVIE GAMES SA |
| RenaissanceRe Holdings vs. Australian Agricultural | RenaissanceRe Holdings vs. WIMFARM SA EO | RenaissanceRe Holdings vs. X FAB Silicon Foundries | RenaissanceRe Holdings vs. Federal Agricultural Mortgage |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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