Correlation Between Texas Instruments and X Fab

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

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

Diversification Opportunities for Texas Instruments and X Fab

0.63

Correlation Coefficient

Texas Instruments  X Fab

Poor diversification

The 3 months correlation between Texas and XFB is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Texas Instruments Incorporated and X Fab Silicon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Fab Silicon and Texas Instruments 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 Texas Instruments Incorporated 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 Texas Instruments i.e., Texas Instruments and X Fab go up and down completely randomly.

Pair Corralation between Texas Instruments and X Fab

Assuming the 90 days horizon Texas Instruments is expected to generate 1.38 times less return on investment than X Fab. But when comparing it to its historical volatility, Texas Instruments Incorporated is 1.28 times less risky than X Fab. It trades about 0.28 of its potential returns per unit of risk. X Fab Silicon is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  398.00  in X Fab Silicon on April 20, 2025 and sell it today you would earn a total of  295.00  from holding X Fab Silicon or generate 74.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Texas Instruments Incorporated  vs.  X Fab Silicon

Texas Instruments

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Instruments Incorporated are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Texas Instruments reported solid returns over the last few months and may actually be approaching a breakup point.

X Fab Silicon

Risk-Adjusted Performance

Solid

Over the last 90 days X Fab Silicon has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, X Fab reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Texas Instruments and X Fab

The main advantage of trading using opposite Texas Instruments and X Fab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Texas Instruments 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 Texas Instruments Incorporated and X Fab Silicon 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 Global Correlations module to find global opportunities by holding instruments from different markets.