Correlation Between STMicroelectronics and Grupo Mxico
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Grupo Mxico 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 Grupo Mxico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Grupo Mxico SAB, you can compare the effects of market volatilities on STMicroelectronics and Grupo Mxico 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 Grupo Mxico. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Grupo Mxico.
Diversification Opportunities for STMicroelectronics and Grupo Mxico
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STMicroelectronics and Grupo is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Grupo Mxico SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Mxico SAB 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 Grupo Mxico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Mxico SAB has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Grupo Mxico go up and down completely randomly.
Pair Corralation between STMicroelectronics and Grupo Mxico
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the Grupo Mxico. But the stock apears to be less risky and, when comparing its historical volatility, STMicroelectronics NV is 2.41 times less risky than Grupo Mxico. The stock trades about -0.02 of its potential returns per unit of risk. The Grupo Mxico SAB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 364.00 in Grupo Mxico SAB on September 25, 2024 and sell it today you would earn a total of 105.00 from holding Grupo Mxico SAB or generate 28.85% 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. Grupo Mxico SAB
Performance |
Timeline |
STMicroelectronics |
Grupo Mxico SAB |
STMicroelectronics and Grupo Mxico Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with STMicroelectronics and Grupo Mxico
The main advantage of trading using opposite STMicroelectronics and Grupo Mxico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Grupo Mxico 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 Grupo Mxico will offset losses from the drop in Grupo Mxico's long position.STMicroelectronics vs. Taiwan Semiconductor Manufacturing | STMicroelectronics vs. Broadcom | STMicroelectronics vs. Texas Instruments Incorporated | STMicroelectronics vs. QUALCOMM Incorporated |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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