Correlation Between SL Green and X FAB

Can any of the company-specific risk be diversified away by investing in both SL Green and X FAB 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 SL Green and X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SL Green Realty and X FAB Silicon Foundries, you can compare the effects of market volatilities on SL Green and X FAB 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 SL Green with a short position of X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and X FAB.

Diversification Opportunities for SL Green and X FAB

0.7

Correlation Coefficient

SL Green  X FAB

Poor diversification

The 3 months correlation between GEI and XFB is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon and SL Green 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 SL Green Realty are associated (or correlated) with X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of SL Green i.e., SL Green and X FAB go up and down completely randomly.

Pair Corralation between SL Green and X FAB

Assuming the 90 days horizon SL Green Realty is expected to generate 0.82 times more return on investment than X FAB. However, SL Green Realty is 1.22 times less risky than X FAB. It trades about -0.09 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.12 per unit of risk. If you would invest  6,291  in SL Green Realty on December 27, 2024 and sell it today you would lose (823.00) from holding SL Green Realty or give up 13.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

SL Green Realty  vs.  X FAB Silicon Foundries

SL Green Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days SL Green Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

X FAB Silicon

Risk-Adjusted Performance

Very Weak

Over the last 90 days X FAB Silicon Foundries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with SL Green and X FAB

The main advantage of trading using opposite SL Green and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB's long position.

The idea behind SL Green Realty and X FAB Silicon Foundries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.