Correlation Between X FAB and ENGIE ADR/1

Can any of the company-specific risk be diversified away by investing in both X FAB and ENGIE ADR/1 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 ENGIE ADR/1 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 ENGIE ADR1 EO, you can compare the effects of market volatilities on X FAB and ENGIE ADR/1 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 ENGIE ADR/1. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and ENGIE ADR/1.

Diversification Opportunities for X FAB and ENGIE ADR/1

-0.62

Correlation Coefficient

X FAB  ENGIE ADR/1

Excellent diversification

The 3 months correlation between XFB and ENGIE is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and ENGIE ADR1 EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENGIE ADR1 EO 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 ENGIE ADR/1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENGIE ADR1 EO has no effect on the direction of X FAB i.e., X FAB and ENGIE ADR/1 go up and down completely randomly.

Pair Corralation between X FAB and ENGIE ADR/1

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the ENGIE ADR/1. In addition to that, X FAB is 2.5 times more volatile than ENGIE ADR1 EO. It trades about -0.02 of its total potential returns per unit of risk. ENGIE ADR1 EO is currently generating about 0.21 per unit of volatility. If you would invest  1,480  in ENGIE ADR1 EO on December 21, 2024 and sell it today you would earn a total of  220.00  from holding ENGIE ADR1 EO or generate 14.86% 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.  ENGIE ADR1 EO

X FAB Silicon

Risk-Adjusted Performance

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 comparatively stable basic indicators, X FAB is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ENGIE ADR1 EO

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ENGIE ADR1 EO are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, ENGIE ADR/1 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with X FAB and ENGIE ADR/1

The main advantage of trading using opposite X FAB and ENGIE ADR/1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, ENGIE ADR/1 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 ENGIE ADR/1 will offset losses from the drop in ENGIE ADR/1's long position.

The idea behind X FAB Silicon Foundries and ENGIE ADR1 EO 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.