Correlation Between X FAB and PANDORA
Can any of the company-specific risk be diversified away by investing in both X FAB and PANDORA 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 PANDORA 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 PANDORA, you can compare the effects of market volatilities on X FAB and PANDORA 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 PANDORA. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and PANDORA.
Diversification Opportunities for X FAB and PANDORA
Average diversification
The 3 months correlation between XFB and PANDORA is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and PANDORA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PANDORA 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 PANDORA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PANDORA has no effect on the direction of X FAB i.e., X FAB and PANDORA go up and down completely randomly.
Pair Corralation between X FAB and PANDORA
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the PANDORA. In addition to that, X FAB is 1.28 times more volatile than PANDORA. It trades about -0.01 of its total potential returns per unit of risk. PANDORA is currently generating about 0.14 per unit of volatility. If you would invest 4,594 in PANDORA on September 13, 2024 and sell it today you would earn a total of 12,346 from holding PANDORA or generate 268.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. PANDORA
Performance |
| Timeline |
| X FAB Silicon |
| PANDORA |
X FAB and PANDORA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and PANDORA
The main advantage of trading using opposite X FAB and PANDORA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, PANDORA 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 PANDORA will offset losses from the drop in PANDORA's long position.| X FAB vs. Highlight Communications AG | X FAB vs. Transportadora de Gas | X FAB vs. Global Ship Lease | X FAB vs. USWE SPORTS AB |
| PANDORA vs. Aedas Homes SA | PANDORA vs. BRIT AMER TOBACCO | PANDORA vs. Align Technology | PANDORA vs. Amkor Technology |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |