Correlation Between X FAB and Playtech Plc
Can any of the company-specific risk be diversified away by investing in both X FAB and Playtech Plc 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 Playtech Plc 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 Playtech plc, you can compare the effects of market volatilities on X FAB and Playtech Plc 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 Playtech Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Playtech Plc.
Diversification Opportunities for X FAB and Playtech Plc
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between XFB and Playtech is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Playtech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech plc 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 Playtech Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtech plc has no effect on the direction of X FAB i.e., X FAB and Playtech Plc go up and down completely randomly.
Pair Corralation between X FAB and Playtech Plc
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 3.59 times more return on investment than Playtech Plc. However, X FAB is 3.59 times more volatile than Playtech plc. It trades about 0.19 of its potential returns per unit of risk. Playtech plc is currently generating about 0.14 per unit of risk. If you would invest 446.00 in X FAB Silicon Foundries on September 13, 2024 and sell it today you would earn a total of 48.00 from holding X FAB Silicon Foundries or generate 10.76% 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. Playtech plc
Performance |
| Timeline |
| X FAB Silicon |
| Playtech plc |
X FAB and Playtech Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Playtech Plc
The main advantage of trading using opposite X FAB and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Playtech Plc 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 Playtech Plc will offset losses from the drop in Playtech Plc'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 |
| Playtech Plc vs. Apple Inc | Playtech Plc vs. Apple Inc | Playtech Plc vs. Apple Inc | Playtech Plc 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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