Correlation Between STMicroelectronics and Bell Food
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Bell Food 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 Bell Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Bell Food Group, you can compare the effects of market volatilities on STMicroelectronics and Bell Food 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 Bell Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Bell Food.
Diversification Opportunities for STMicroelectronics and Bell Food
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between STMicroelectronics and Bell is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Bell Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bell Food Group 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 Bell Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bell Food Group has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Bell Food go up and down completely randomly.
Pair Corralation between STMicroelectronics and Bell Food
Assuming the 90 days trading horizon STMicroelectronics NV is expected to generate 1.29 times more return on investment than Bell Food. However, STMicroelectronics is 1.29 times more volatile than Bell Food Group. It trades about 0.05 of its potential returns per unit of risk. Bell Food Group is currently generating about -0.12 per unit of risk. If you would invest 2,424 in STMicroelectronics NV on October 25, 2024 and sell it today you would earn a total of 44.00 from holding STMicroelectronics NV or generate 1.82% 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. Bell Food Group
Performance |
| Timeline |
| STMicroelectronics |
| Bell Food Group |
STMicroelectronics and Bell Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Bell Food
The main advantage of trading using opposite STMicroelectronics and Bell Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Bell Food 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 Bell Food will offset losses from the drop in Bell Food's long position.| STMicroelectronics vs. Coor Service Management | STMicroelectronics vs. iShares Dow Jones | STMicroelectronics vs. Franklin Libertyshares ICAV | STMicroelectronics vs. Aeorema Communications Plc |
| Bell Food vs. STMicroelectronics NV | Bell Food vs. Rheinmetall AG | Bell Food vs. Ally Financial | Bell Food vs. Cornish Metals |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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