Correlation Between X FAB and VULCAN MATERIALS
Can any of the company-specific risk be diversified away by investing in both X FAB and VULCAN MATERIALS 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 VULCAN MATERIALS 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 VULCAN MATERIALS, you can compare the effects of market volatilities on X FAB and VULCAN MATERIALS 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 VULCAN MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and VULCAN MATERIALS.
Diversification Opportunities for X FAB and VULCAN MATERIALS
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XFB and VULCAN is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and VULCAN MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VULCAN MATERIALS 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 VULCAN MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VULCAN MATERIALS has no effect on the direction of X FAB i.e., X FAB and VULCAN MATERIALS go up and down completely randomly.
Pair Corralation between X FAB and VULCAN MATERIALS
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the VULCAN MATERIALS. In addition to that, X FAB is 1.7 times more volatile than VULCAN MATERIALS. It trades about -0.08 of its total potential returns per unit of risk. VULCAN MATERIALS is currently generating about 0.07 per unit of volatility. If you would invest 20,143 in VULCAN MATERIALS on November 9, 2024 and sell it today you would earn a total of 6,457 from holding VULCAN MATERIALS or generate 32.06% 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. VULCAN MATERIALS
Performance |
| Timeline |
| X FAB Silicon |
| VULCAN MATERIALS |
X FAB and VULCAN MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and VULCAN MATERIALS
The main advantage of trading using opposite X FAB and VULCAN MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, VULCAN MATERIALS 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 VULCAN MATERIALS will offset losses from the drop in VULCAN MATERIALS's long position.| X FAB vs. Salesforce | X FAB vs. YATRA ONLINE DL 0001 | X FAB vs. Ares Management Corp | X FAB vs. MUTUIONLINE |
| VULCAN MATERIALS vs. ASPEN TECHINC DL | VULCAN MATERIALS vs. Uber Technologies | VULCAN MATERIALS vs. YATRA ONLINE DL 0001 | VULCAN MATERIALS vs. Addtech AB |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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