Correlation Between X-FAB Silicon and Mastercard

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

Diversification Opportunities for X-FAB Silicon and Mastercard

0.25

Correlation Coefficient

X-FAB Silicon  Mastercard

Modest diversification

The 3 months correlation between X-FAB and Mastercard is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Mastercard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard 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 Mastercard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Mastercard go up and down completely randomly.

Pair Corralation between X-FAB Silicon and Mastercard

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Mastercard. In addition to that, X-FAB Silicon is 1.87 times more volatile than Mastercard. It trades about -0.08 of its total potential returns per unit of risk. Mastercard is currently generating about -0.01 per unit of volatility. If you would invest  51,143  in Mastercard on December 25, 2024 and sell it today you would lose (793.00) from holding Mastercard or give up 1.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

X FAB Silicon Foundries  vs.  Mastercard

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Mastercard

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mastercard has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Mastercard is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with X-FAB Silicon and Mastercard

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

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