Correlation Between X-FAB Silicon and Guidewire Software
Can any of the company-specific risk be diversified away by investing in both X-FAB Silicon and Guidewire Software 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 Silicon and Guidewire Software 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 Guidewire Software, you can compare the effects of market volatilities on X-FAB Silicon and Guidewire Software 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 Silicon with a short position of Guidewire Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of X-FAB Silicon and Guidewire Software.
Diversification Opportunities for X-FAB Silicon and Guidewire Software
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between X-FAB and Guidewire is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Guidewire Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidewire Software and X-FAB Silicon 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 Guidewire Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidewire Software has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Guidewire Software go up and down completely randomly.
Pair Corralation between X-FAB Silicon and Guidewire Software
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Guidewire Software. In addition to that, X-FAB Silicon is 1.14 times more volatile than Guidewire Software. It trades about -0.02 of its total potential returns per unit of risk. Guidewire Software is currently generating about 0.1 per unit of volatility. If you would invest 6,550 in Guidewire Software on October 17, 2024 and sell it today you would earn a total of 10,450 from holding Guidewire Software or generate 159.54% 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. Guidewire Software
Performance |
| Timeline |
| X FAB Silicon |
| Guidewire Software |
X-FAB Silicon and Guidewire Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X-FAB Silicon and Guidewire Software
The main advantage of trading using opposite X-FAB Silicon and Guidewire Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X-FAB Silicon position performs unexpectedly, Guidewire Software 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 Guidewire Software will offset losses from the drop in Guidewire Software's long position.| X-FAB Silicon vs. Mount Gibson Iron | X-FAB Silicon vs. Khiron Life Sciences | X-FAB Silicon vs. Yuexiu Transport Infrastructure | X-FAB Silicon vs. GREENX METALS LTD |
| Guidewire Software vs. Align Technology | Guidewire Software vs. X FAB Silicon Foundries | Guidewire Software vs. MACOM Technology Solutions | Guidewire Software vs. MagnaChip Semiconductor Corp |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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