Correlation Between STMicroelectronics and SL Private
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and SL Private 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 STMicroelectronics and SL Private into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and SL Private Equity, you can compare the effects of market volatilities on STMicroelectronics and SL Private 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 STMicroelectronics with a short position of SL Private. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and SL Private.
Diversification Opportunities for STMicroelectronics and SL Private
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between STMicroelectronics and SLPE is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and SL Private Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SL Private Equity and STMicroelectronics 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 STMicroelectronics NV are associated (or correlated) with SL Private. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SL Private Equity has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and SL Private go up and down completely randomly.
Pair Corralation between STMicroelectronics and SL Private
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the SL Private. In addition to that, STMicroelectronics is 2.42 times more volatile than SL Private Equity. It trades about -0.01 of its total potential returns per unit of risk. SL Private Equity is currently generating about 0.08 per unit of volatility. If you would invest 53,400 in SL Private Equity on October 11, 2024 and sell it today you would earn a total of 2,200 from holding SL Private Equity or generate 4.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
STMicroelectronics NV vs. SL Private Equity
Performance |
Timeline |
STMicroelectronics |
SL Private Equity |
STMicroelectronics and SL Private Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with STMicroelectronics and SL Private
The main advantage of trading using opposite STMicroelectronics and SL Private positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, SL Private 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 SL Private will offset losses from the drop in SL Private's long position.STMicroelectronics vs. Metals Exploration Plc | STMicroelectronics vs. Jacquet Metal Service | STMicroelectronics vs. Delta Air Lines | STMicroelectronics vs. Hochschild Mining plc |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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