Correlation Between United States and X Fab

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

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

Diversification Opportunities for United States and X Fab

-0.21

Correlation Coefficient

United States  X Fab

Very good diversification

The 3 months correlation between United and XFB is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and X Fab Silicon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Fab Silicon and United States 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 United States Steel 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 United States i.e., United States and X Fab go up and down completely randomly.

Pair Corralation between United States and X Fab

Assuming the 90 days trading horizon United States Steel is expected to generate 1.03 times more return on investment than X Fab. However, United States is 1.03 times more volatile than X Fab Silicon. It trades about 0.17 of its potential returns per unit of risk. X Fab Silicon is currently generating about -0.11 per unit of risk. If you would invest  2,975  in United States Steel on December 29, 2024 and sell it today you would earn a total of  991.00  from holding United States Steel or generate 33.31% return on investment over 90 days.

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

United States Steel  vs.  X Fab Silicon

United States Steel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United States Steel are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, United States reported solid returns over the last few months and may actually be approaching a breakup point.

X Fab Silicon

Risk-Adjusted Performance

Very Weak

Over the last 90 days X Fab Silicon has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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.

Pair Trading with United States and X Fab

The main advantage of trading using opposite United States and X Fab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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 United States Steel and X Fab Silicon 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.