Correlation Between MT Bank and X FAB

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

By analyzing existing cross correlation between MT Bank Corp and X FAB Silicon Foundries, you can compare the effects of market volatilities on MT Bank and X FAB 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 MT Bank with a short position of X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of MT Bank and X FAB.

Diversification Opportunities for MT Bank and X FAB

0.88

Correlation Coefficient

MT Bank  X FAB

Very poor diversification

The 3 months correlation between 0JW2 and 0ROZ is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank Corp and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon and MT Bank 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 MT Bank Corp are associated (or correlated) with X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of MT Bank i.e., MT Bank and X FAB go up and down completely randomly.

Pair Corralation between MT Bank and X FAB

Assuming the 90 days trading horizon MT Bank is expected to generate 1.89 times less return on investment than X FAB. But when comparing it to its historical volatility, MT Bank Corp is 1.64 times less risky than X FAB. It trades about 0.22 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  464.00  in X FAB Silicon Foundries on April 24, 2025 and sell it today you would earn a total of  196.00  from holding X FAB Silicon Foundries or generate 42.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	89.06%
Values	Daily Returns

MT Bank Corp  vs.  X FAB Silicon Foundries

MT Bank Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MT Bank Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, MT Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

X FAB Silicon

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in X FAB Silicon Foundries are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, X FAB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MT Bank and X FAB

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

The idea behind MT Bank Corp and X FAB Silicon Foundries 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.