Correlation Between X-FAB Silicon and Alliance Data
Can any of the company-specific risk be diversified away by investing in both X-FAB Silicon and Alliance Data 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 Alliance Data 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 Alliance Data Systems, you can compare the effects of market volatilities on X-FAB Silicon and Alliance Data 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 Alliance Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of X-FAB Silicon and Alliance Data.
Diversification Opportunities for X-FAB Silicon and Alliance Data
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between X-FAB and Alliance is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Alliance Data Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Data Systems 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 Alliance Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Data Systems has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Alliance Data go up and down completely randomly.
Pair Corralation between X-FAB Silicon and Alliance Data
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 1.24 times more return on investment than Alliance Data. However, X-FAB Silicon is 1.24 times more volatile than Alliance Data Systems. It trades about 0.06 of its potential returns per unit of risk. Alliance Data Systems is currently generating about 0.06 per unit of risk. If you would invest 440.00 in X FAB Silicon Foundries on November 6, 2024 and sell it today you would earn a total of 34.00 from holding X FAB Silicon Foundries or generate 7.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Alliance Data Systems
Performance |
| Timeline |
| X FAB Silicon |
| Alliance Data Systems |
X-FAB Silicon and Alliance Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X-FAB Silicon and Alliance Data
The main advantage of trading using opposite X-FAB Silicon and Alliance Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X-FAB Silicon position performs unexpectedly, Alliance Data 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 Alliance Data will offset losses from the drop in Alliance Data's long position.| X-FAB Silicon vs. CarsalesCom | X-FAB Silicon vs. Lamar Advertising | X-FAB Silicon vs. SALESFORCE INC CDR | X-FAB Silicon vs. Salesforce |
| Alliance Data vs. PLAY2CHILL SA ZY | Alliance Data vs. EIDESVIK OFFSHORE NK | Alliance Data vs. CSSC Offshore Marine | Alliance Data vs. Gaming and Leisure |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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