Correlation Between StrikePoint Gold and X FAB

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

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

Diversification Opportunities for StrikePoint Gold and X FAB

-0.49

Correlation Coefficient

StrikePoint Gold  X FAB

Very good diversification

The 3 months correlation between StrikePoint and XFB is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding StrikePoint Gold 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 StrikePoint Gold 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 StrikePoint Gold 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 StrikePoint Gold i.e., StrikePoint Gold and X FAB go up and down completely randomly.

Pair Corralation between StrikePoint Gold and X FAB

Assuming the 90 days trading horizon StrikePoint Gold is expected to under-perform the X FAB. In addition to that, StrikePoint Gold is 2.54 times more volatile than X FAB Silicon Foundries. It trades about -0.64 of its total potential returns per unit of risk. X FAB Silicon Foundries is currently generating about 0.0 per unit of volatility. If you would invest  509.00  in X FAB Silicon Foundries on October 9, 2024 and sell it today you would lose (2.00) from holding X FAB Silicon Foundries or give up 0.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	50.0%
Values	Daily Returns

StrikePoint Gold  vs.  X FAB Silicon Foundries

StrikePoint Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StrikePoint Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

X FAB Silicon

Risk-Adjusted Performance

0 of 100

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 rather sound fundamental drivers, X FAB is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with StrikePoint Gold and X FAB

The main advantage of trading using opposite StrikePoint Gold and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if StrikePoint Gold 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 StrikePoint Gold 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.