Correlation Between X FAB and T-MOBILE

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

Diversification Opportunities for X FAB and T-MOBILE

-0.64

Correlation Coefficient

X FAB  T-MOBILE

Excellent diversification

The 3 months correlation between XFB and T-MOBILE is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and T MOBILE US in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T MOBILE US 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 T-MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T MOBILE US has no effect on the direction of X FAB i.e., X FAB and T-MOBILE go up and down completely randomly.

Pair Corralation between X FAB and T-MOBILE

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the T-MOBILE. In addition to that, X FAB is 2.0 times more volatile than T MOBILE US. It trades about -0.02 of its total potential returns per unit of risk. T MOBILE US is currently generating about 0.08 per unit of volatility. If you would invest  13,036  in T MOBILE US on October 11, 2024 and sell it today you would earn a total of  8,059  from holding T MOBILE US or generate 61.82% return on investment over 90 days.

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

X FAB Silicon Foundries  vs.  T MOBILE US

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.

T MOBILE US

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in T MOBILE US are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, T-MOBILE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with X FAB and T-MOBILE

The main advantage of trading using opposite X FAB and T-MOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, T-MOBILE 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 T-MOBILE will offset losses from the drop in T-MOBILE's long position.

The idea behind X FAB Silicon Foundries and T MOBILE US 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 Global Correlations module to find global opportunities by holding instruments from different markets.