Correlation Between X FAB and Waste Management
Can any of the company-specific risk be diversified away by investing in both X FAB and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on X FAB and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Waste Management.
Diversification Opportunities for X FAB and Waste Management
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between XFB and Waste is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of X FAB i.e., X FAB and Waste Management go up and down completely randomly.
Pair Corralation between X FAB and Waste Management
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Waste Management. In addition to that, X FAB is 2.14 times more volatile than Waste Management. It trades about -0.06 of its total potential returns per unit of risk. Waste Management is currently generating about 0.06 per unit of volatility. If you would invest 15,256 in Waste Management on September 30, 2024 and sell it today you would earn a total of 4,274 from holding Waste Management or generate 28.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Waste Management
Performance |
| Timeline |
| X FAB Silicon |
| Waste Management |
X FAB and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Waste Management
The main advantage of trading using opposite X FAB and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| X FAB vs. Verizon Communications | X FAB vs. Norwegian Air Shuttle | X FAB vs. HEMISPHERE EGY | X FAB vs. SEALED AIR |
| Waste Management vs. Astral Foods Limited | Waste Management vs. MUTUIONLINE | Waste Management vs. CarsalesCom | Waste Management vs. LIFEWAY FOODS |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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