Correlation Between STMicroelectronics and Griffin Mining
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Griffin Mining 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 Griffin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Griffin Mining, you can compare the effects of market volatilities on STMicroelectronics and Griffin Mining 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 Griffin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Griffin Mining.
Diversification Opportunities for STMicroelectronics and Griffin Mining
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STMicroelectronics and Griffin is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Griffin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffin Mining 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 Griffin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Griffin Mining has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Griffin Mining go up and down completely randomly.
Pair Corralation between STMicroelectronics and Griffin Mining
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the Griffin Mining. In addition to that, STMicroelectronics is 1.01 times more volatile than Griffin Mining. It trades about -0.06 of its total potential returns per unit of risk. Griffin Mining is currently generating about 0.09 per unit of volatility. If you would invest 8,490 in Griffin Mining on September 12, 2024 and sell it today you would earn a total of 5,910 from holding Griffin Mining or generate 69.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.7% |
| Values | Daily Returns |
STMicroelectronics NV vs. Griffin Mining
Performance |
| Timeline |
| STMicroelectronics |
| Griffin Mining |
STMicroelectronics and Griffin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Griffin Mining
The main advantage of trading using opposite STMicroelectronics and Griffin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Griffin Mining 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 Griffin Mining will offset losses from the drop in Griffin Mining's long position.| STMicroelectronics vs. Gamma Communications PLC | STMicroelectronics vs. Panther Metals PLC | STMicroelectronics vs. Batm Advanced Communications | STMicroelectronics vs. Anglesey Mining |
| Griffin Mining vs. Givaudan SA | Griffin Mining vs. Antofagasta PLC | Griffin Mining vs. Ferrexpo PLC | Griffin Mining vs. Atalaya Mining |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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