Correlation Between Jacquet Metal and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Jacquet Metal 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 Jacquet Metal and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacquet Metal Service and STMicroelectronics NV, you can compare the effects of market volatilities on Jacquet Metal 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 Jacquet Metal with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacquet Metal and STMicroelectronics.
Diversification Opportunities for Jacquet Metal and STMicroelectronics
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Jacquet and STMicroelectronics is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Jacquet Metal Service and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Jacquet Metal 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 Jacquet Metal Service 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 Jacquet Metal i.e., Jacquet Metal and STMicroelectronics go up and down completely randomly.
Pair Corralation between Jacquet Metal and STMicroelectronics
Assuming the 90 days trading horizon Jacquet Metal Service is expected to generate 0.74 times more return on investment than STMicroelectronics. However, Jacquet Metal Service is 1.36 times less risky than STMicroelectronics. It trades about -0.03 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.12 per unit of risk. If you would invest 1,784 in Jacquet Metal Service on September 1, 2024 and sell it today you would lose (184.00) from holding Jacquet Metal Service or give up 10.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jacquet Metal Service vs. STMicroelectronics NV
Performance |
| Timeline |
| Jacquet Metal Service |
| STMicroelectronics |
Jacquet Metal and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacquet Metal and STMicroelectronics
The main advantage of trading using opposite Jacquet Metal and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacquet Metal 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' long position.| Jacquet Metal vs. Uniper SE | Jacquet Metal vs. Mulberry Group PLC | Jacquet Metal vs. London Security Plc | Jacquet Metal vs. Triad Group 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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