Correlation Between STMicroelectronics and Newmont Corp
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Newmont Corp 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 Newmont Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Newmont Corp, you can compare the effects of market volatilities on STMicroelectronics and Newmont Corp 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 Newmont Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Newmont Corp.
Diversification Opportunities for STMicroelectronics and Newmont Corp
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STMicroelectronics and Newmont is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Newmont Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont Corp 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 Newmont Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont Corp has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Newmont Corp go up and down completely randomly.
Pair Corralation between STMicroelectronics and Newmont Corp
Assuming the 90 days trading horizon STMicroelectronics is expected to generate 8.34 times less return on investment than Newmont Corp. In addition to that, STMicroelectronics is 1.64 times more volatile than Newmont Corp. It trades about 0.04 of its total potential returns per unit of risk. Newmont Corp is currently generating about 0.51 per unit of volatility. If you would invest 3,723 in Newmont Corp on October 29, 2024 and sell it today you would earn a total of 511.00 from holding Newmont Corp or generate 13.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Newmont Corp
Performance |
| Timeline |
| STMicroelectronics |
| Newmont Corp |
STMicroelectronics and Newmont Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Newmont Corp
The main advantage of trading using opposite STMicroelectronics and Newmont Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Newmont Corp 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 Newmont Corp will offset losses from the drop in Newmont Corp's long position.| STMicroelectronics vs. Cornish Metals | STMicroelectronics vs. First Class Metals | STMicroelectronics vs. Atalaya Mining | STMicroelectronics vs. Air Products Chemicals |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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