Correlation Between LEGACY IRON and STMICROELECTRONICS
Can any of the company-specific risk be diversified away by investing in both LEGACY IRON and STMICROELECTRONICS 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 LEGACY IRON and STMICROELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LEGACY IRON ORE and STMICROELECTRONICS, you can compare the effects of market volatilities on LEGACY IRON and STMICROELECTRONICS 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 LEGACY IRON with a short position of STMICROELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEGACY IRON and STMICROELECTRONICS.
Diversification Opportunities for LEGACY IRON and STMICROELECTRONICS
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LEGACY and STMICROELECTRONICS is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding LEGACY IRON ORE and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS and LEGACY IRON 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 LEGACY IRON ORE are associated (or correlated) with STMICROELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMICROELECTRONICS has no effect on the direction of LEGACY IRON i.e., LEGACY IRON and STMICROELECTRONICS go up and down completely randomly.
Pair Corralation between LEGACY IRON and STMICROELECTRONICS
If you would invest 2,503 in STMICROELECTRONICS on October 11, 2024 and sell it today you would earn a total of 47.00 from holding STMICROELECTRONICS or generate 1.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
LEGACY IRON ORE vs. STMICROELECTRONICS
Performance |
Timeline |
LEGACY IRON ORE |
STMICROELECTRONICS |
LEGACY IRON and STMICROELECTRONICS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LEGACY IRON and STMICROELECTRONICS
The main advantage of trading using opposite LEGACY IRON and STMICROELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEGACY IRON position performs unexpectedly, STMICROELECTRONICS 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 STMICROELECTRONICS will offset losses from the drop in STMICROELECTRONICS's long position.LEGACY IRON vs. Apple Inc | LEGACY IRON vs. Apple Inc | LEGACY IRON vs. Apple Inc | LEGACY IRON vs. Apple Inc |
STMICROELECTRONICS vs. BOSTON BEER A | STMICROELECTRONICS vs. Hitachi Construction Machinery | STMICROELECTRONICS vs. United Breweries Co | STMICROELECTRONICS vs. National Beverage Corp |
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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