Correlation Between X-FAB Silicon and Willamette Valley

Can any of the company-specific risk be diversified away by investing in both X-FAB Silicon and Willamette Valley 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 Willamette Valley 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 Willamette Valley Vineyards, you can compare the effects of market volatilities on X-FAB Silicon and Willamette Valley 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 Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of X-FAB Silicon and Willamette Valley.

Diversification Opportunities for X-FAB Silicon and Willamette Valley

0.19

Correlation Coefficient

X-FAB Silicon  Willamette Valley

Average diversification

The 3 months correlation between X-FAB and Willamette is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley 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 Willamette Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willamette Valley has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Willamette Valley go up and down completely randomly.

Pair Corralation between X-FAB Silicon and Willamette Valley

Assuming the 90 days horizon X-FAB Silicon is expected to generate 29.83 times less return on investment than Willamette Valley. But when comparing it to its historical volatility, X FAB Silicon Foundries is 1.58 times less risky than Willamette Valley. It trades about 0.02 of its potential returns per unit of risk. Willamette Valley Vineyards is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest  330.00  in Willamette Valley Vineyards on October 22, 2024 and sell it today you would earn a total of  140.00  from holding Willamette Valley Vineyards or generate 42.42% 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.  Willamette Valley Vineyards

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. Despite nearly stable fundamental drivers, X-FAB Silicon is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Willamette Valley

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Willamette Valley Vineyards are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Willamette Valley demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with X-FAB Silicon and Willamette Valley

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

The idea behind X FAB Silicon Foundries and Willamette Valley Vineyards 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.