Correlation Between STMicroelectronics and Futura Medical
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Futura Medical 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 Futura Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Futura Medical, you can compare the effects of market volatilities on STMicroelectronics and Futura Medical 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 Futura Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Futura Medical.
Diversification Opportunities for STMicroelectronics and Futura Medical
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between STMicroelectronics and Futura is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Futura Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futura Medical 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 Futura Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futura Medical has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Futura Medical go up and down completely randomly.
Pair Corralation between STMicroelectronics and Futura Medical
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the Futura Medical. But the stock apears to be less risky and, when comparing its historical volatility, STMicroelectronics NV is 1.85 times less risky than Futura Medical. The stock trades about -0.03 of its potential returns per unit of risk. The Futura Medical is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 4,953 in Futura Medical on September 3, 2024 and sell it today you would lose (1,583) from holding Futura Medical or give up 31.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
STMicroelectronics NV vs. Futura Medical
Performance |
| Timeline |
| STMicroelectronics |
| Futura Medical |
STMicroelectronics and Futura Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Futura Medical
The main advantage of trading using opposite STMicroelectronics and Futura Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Futura Medical 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 Futura Medical will offset losses from the drop in Futura Medical's long position.| STMicroelectronics vs. Deltex Medical Group | STMicroelectronics vs. Fevertree Drinks Plc | STMicroelectronics vs. Associated British Foods | STMicroelectronics vs. Medical Properties Trust |
| Futura Medical vs. Lendinvest PLC | Futura Medical vs. Regions Financial Corp | Futura Medical vs. Dentsply Sirona | Futura Medical vs. Discover Financial Services |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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