Correlation Between X-FAB Silicon and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both X-FAB Silicon and Costco Wholesale 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 Costco Wholesale 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 Costco Wholesale Corp, you can compare the effects of market volatilities on X-FAB Silicon and Costco Wholesale 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 Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of X-FAB Silicon and Costco Wholesale.
Diversification Opportunities for X-FAB Silicon and Costco Wholesale
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between X-FAB and Costco is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Costco Wholesale Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale Corp 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 Costco Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costco Wholesale Corp has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Costco Wholesale go up and down completely randomly.
Pair Corralation between X-FAB Silicon and Costco Wholesale
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Costco Wholesale. In addition to that, X-FAB Silicon is 1.9 times more volatile than Costco Wholesale Corp. It trades about -0.11 of its total potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.16 per unit of volatility. If you would invest 54,787 in Costco Wholesale Corp on September 4, 2024 and sell it today you would earn a total of 37,993 from holding Costco Wholesale Corp or generate 69.35% 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. Costco Wholesale Corp
Performance |
| Timeline |
| X FAB Silicon |
| Costco Wholesale Corp |
X-FAB Silicon and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X-FAB Silicon and Costco Wholesale
The main advantage of trading using opposite X-FAB Silicon and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X-FAB Silicon position performs unexpectedly, Costco Wholesale 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 Costco Wholesale will offset losses from the drop in Costco Wholesale's long position.| X-FAB Silicon vs. Suntory Beverage Food | X-FAB Silicon vs. SMA Solar Technology | X-FAB Silicon vs. Microchip Technology Incorporated | X-FAB Silicon vs. Micron Technology |
| Costco Wholesale vs. Calibre Mining Corp | Costco Wholesale vs. X FAB Silicon Foundries | Costco Wholesale vs. Wayside Technology Group | Costco Wholesale vs. AECOM 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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