Correlation Between STMicroelectronics and Ecclesiastical Insurance
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Ecclesiastical Insurance 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 Ecclesiastical Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Ecclesiastical Insurance Office, you can compare the effects of market volatilities on STMicroelectronics and Ecclesiastical Insurance 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 Ecclesiastical Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Ecclesiastical Insurance.
Diversification Opportunities for STMicroelectronics and Ecclesiastical Insurance
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between STMicroelectronics and Ecclesiastical is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Ecclesiastical Insurance Offic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecclesiastical Insurance 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 Ecclesiastical Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecclesiastical Insurance has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Ecclesiastical Insurance go up and down completely randomly.
Pair Corralation between STMicroelectronics and Ecclesiastical Insurance
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the Ecclesiastical Insurance. In addition to that, STMicroelectronics is 2.5 times more volatile than Ecclesiastical Insurance Office. It trades about -0.1 of its total potential returns per unit of risk. Ecclesiastical Insurance Office is currently generating about 0.06 per unit of volatility. If you would invest 11,945 in Ecclesiastical Insurance Office on September 4, 2024 and sell it today you would earn a total of 1,505 from holding Ecclesiastical Insurance Office or generate 12.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Ecclesiastical Insurance Offic
Performance |
| Timeline |
| STMicroelectronics |
| Ecclesiastical Insurance |
STMicroelectronics and Ecclesiastical Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Ecclesiastical Insurance
The main advantage of trading using opposite STMicroelectronics and Ecclesiastical Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Ecclesiastical Insurance 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 Ecclesiastical Insurance will offset losses from the drop in Ecclesiastical Insurance's long position.| STMicroelectronics vs. Sovereign Metals | STMicroelectronics vs. GreenX Metals | STMicroelectronics vs. Fulcrum Metals PLC | STMicroelectronics vs. Zurich Insurance Group |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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