Correlation Between STMicroelectronics and Charter Communications
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Charter Communications 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 Charter Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Charter Communications Cl, you can compare the effects of market volatilities on STMicroelectronics and Charter Communications 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 Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Charter Communications.
Diversification Opportunities for STMicroelectronics and Charter Communications
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between STMicroelectronics and Charter is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Charter Communications Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Charter Communications go up and down completely randomly.
Pair Corralation between STMicroelectronics and Charter Communications
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the Charter Communications. In addition to that, STMicroelectronics is 1.08 times more volatile than Charter Communications Cl. It trades about -0.04 of its total potential returns per unit of risk. Charter Communications Cl is currently generating about 0.15 per unit of volatility. If you would invest 36,777 in Charter Communications Cl on September 2, 2024 and sell it today you would earn a total of 2,618 from holding Charter Communications Cl or generate 7.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Charter Communications Cl
Performance |
| Timeline |
| STMicroelectronics |
| Charter Communications |
STMicroelectronics and Charter Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Charter Communications
The main advantage of trading using opposite STMicroelectronics and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.| STMicroelectronics vs. Thyssenkrupp AG ON | STMicroelectronics vs. Cloudcoco Group PLC | STMicroelectronics vs. Trainline Plc | STMicroelectronics vs. Diversified Energy |
| Charter Communications vs. Uniper SE | Charter Communications vs. Mulberry Group PLC | Charter Communications vs. London Security Plc | Charter Communications vs. Triad Group PLC |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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