Correlation Between Globalfoundries and Xerox Corp

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

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

Diversification Opportunities for Globalfoundries and Xerox Corp

0.4

Correlation Coefficient

Globalfoundries  Xerox Corp

Very weak diversification

The 3 months correlation between Globalfoundries and Xerox is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries and Xerox Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xerox Corp and Globalfoundries 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 Globalfoundries are associated (or correlated) with Xerox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xerox Corp has no effect on the direction of Globalfoundries i.e., Globalfoundries and Xerox Corp go up and down completely randomly.

Pair Corralation between Globalfoundries and Xerox Corp

Considering the 90-day investment horizon Globalfoundries is expected to generate 0.31 times more return on investment than Xerox Corp. However, Globalfoundries is 3.23 times less risky than Xerox Corp. It trades about -0.12 of its potential returns per unit of risk. Xerox Corp is currently generating about -0.15 per unit of risk. If you would invest  3,895  in Globalfoundries on May 5, 2025 and sell it today you would lose (237.00) from holding Globalfoundries or give up 6.08% of portfolio value over 90 days.

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

Globalfoundries  vs.  Xerox Corp

Globalfoundries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Globalfoundries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Globalfoundries is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Xerox Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xerox Corp 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 fairly strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Globalfoundries and Xerox Corp

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

The idea behind Globalfoundries and Xerox Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.