Correlation Between X FAB and URBAN OUTFITTERS

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

Diversification Opportunities for X FAB and URBAN OUTFITTERS

0.01

Correlation Coefficient

X FAB  URBAN OUTFITTERS

Significant diversification

The 3 months correlation between XFB and URBAN is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and URBAN OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URBAN OUTFITTERS 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 URBAN OUTFITTERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URBAN OUTFITTERS has no effect on the direction of X FAB i.e., X FAB and URBAN OUTFITTERS go up and down completely randomly.

Pair Corralation between X FAB and URBAN OUTFITTERS

Assuming the 90 days trading horizon X FAB is expected to generate 1.47 times less return on investment than URBAN OUTFITTERS. In addition to that, X FAB is 1.16 times more volatile than URBAN OUTFITTERS. It trades about 0.19 of its total potential returns per unit of risk. URBAN OUTFITTERS is currently generating about 0.33 per unit of volatility. If you would invest  4,920  in URBAN OUTFITTERS on October 5, 2024 and sell it today you would earn a total of  580.00  from holding URBAN OUTFITTERS or generate 11.79% 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.  URBAN OUTFITTERS

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.

URBAN OUTFITTERS

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days URBAN OUTFITTERS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, URBAN OUTFITTERS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with X FAB and URBAN OUTFITTERS

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

The idea behind X FAB Silicon Foundries and URBAN OUTFITTERS 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..