Correlation Between X Fab and Alphabet

Can any of the company-specific risk be diversified away by investing in both X Fab and Alphabet 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 Alphabet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between X Fab Silicon and Alphabet Class A, you can compare the effects of market volatilities on X Fab and Alphabet 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 Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of X Fab and Alphabet.

Diversification Opportunities for X Fab and Alphabet

-0.69

Correlation Coefficient

X Fab  Alphabet

Excellent diversification

The 3 months correlation between XFB and Alphabet is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding X Fab Silicon and Alphabet Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Class A 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 are associated (or correlated) with Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Class A has no effect on the direction of X Fab i.e., X Fab and Alphabet go up and down completely randomly.

Pair Corralation between X Fab and Alphabet

Assuming the 90 days horizon X Fab Silicon is expected to under-perform the Alphabet. In addition to that, X Fab is 1.64 times more volatile than Alphabet Class A. It trades about -0.13 of its total potential returns per unit of risk. Alphabet Class A is currently generating about 0.08 per unit of volatility. If you would invest  14,732  in Alphabet Class A on September 2, 2024 and sell it today you would earn a total of  1,224  from holding Alphabet Class A or generate 8.31% 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  vs.  Alphabet Class A

X Fab Silicon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days X Fab Silicon has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Alphabet Class A

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Class A are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Alphabet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with X Fab and Alphabet

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

The idea behind X Fab Silicon and Alphabet Class A 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.