Correlation Between X-FAB Silicon and MTI WIRELESS
Can any of the company-specific risk be diversified away by investing in both X-FAB Silicon and MTI WIRELESS 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 MTI WIRELESS 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 MTI WIRELESS EDGE, you can compare the effects of market volatilities on X-FAB Silicon and MTI WIRELESS 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 MTI WIRELESS. Check out your portfolio center. Please also check ongoing floating volatility patterns of X-FAB Silicon and MTI WIRELESS.
Diversification Opportunities for X-FAB Silicon and MTI WIRELESS
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between X-FAB and MTI is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and MTI WIRELESS EDGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTI WIRELESS EDGE 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 MTI WIRELESS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTI WIRELESS EDGE has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and MTI WIRELESS go up and down completely randomly.
Pair Corralation between X-FAB Silicon and MTI WIRELESS
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 1.15 times more return on investment than MTI WIRELESS. However, X-FAB Silicon is 1.15 times more volatile than MTI WIRELESS EDGE. It trades about -0.06 of its potential returns per unit of risk. MTI WIRELESS EDGE is currently generating about -0.18 per unit of risk. If you would invest 456.00 in X FAB Silicon Foundries on August 29, 2024 and sell it today you would lose (21.00) from holding X FAB Silicon Foundries or give up 4.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. MTI WIRELESS EDGE
Performance |
| Timeline |
| X FAB Silicon |
| MTI WIRELESS EDGE |
X-FAB Silicon and MTI WIRELESS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X-FAB Silicon and MTI WIRELESS
The main advantage of trading using opposite X-FAB Silicon and MTI WIRELESS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X-FAB Silicon position performs unexpectedly, MTI WIRELESS 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 MTI WIRELESS will offset losses from the drop in MTI WIRELESS's long position.| X-FAB Silicon vs. Apple Inc | X-FAB Silicon vs. Apple Inc | X-FAB Silicon vs. Apple Inc | X-FAB Silicon vs. Apple Inc |
| MTI WIRELESS vs. Apple Inc | MTI WIRELESS vs. Apple Inc | MTI WIRELESS vs. Apple Inc | MTI WIRELESS vs. Apple Inc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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