Correlation Between STMicroelectronics and IShares Physical
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and IShares Physical 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 IShares Physical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and iShares Physical Silver, you can compare the effects of market volatilities on STMicroelectronics and IShares Physical 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 IShares Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and IShares Physical.
Diversification Opportunities for STMicroelectronics and IShares Physical
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between STMicroelectronics and IShares is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and iShares Physical Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Physical Silver 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 IShares Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Physical Silver has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and IShares Physical go up and down completely randomly.
Pair Corralation between STMicroelectronics and IShares Physical
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the IShares Physical. In addition to that, STMicroelectronics is 1.3 times more volatile than iShares Physical Silver. It trades about -0.16 of its total potential returns per unit of risk. iShares Physical Silver is currently generating about 0.03 per unit of volatility. If you would invest 2,805 in iShares Physical Silver on September 5, 2024 and sell it today you would earn a total of 150.00 from holding iShares Physical Silver or generate 5.35% 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. iShares Physical Silver
Performance |
| Timeline |
| STMicroelectronics |
| iShares Physical Silver |
STMicroelectronics and IShares Physical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and IShares Physical
The main advantage of trading using opposite STMicroelectronics and IShares Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, IShares Physical 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 IShares Physical will offset losses from the drop in IShares Physical's long position.| STMicroelectronics vs. State Street Corp | STMicroelectronics vs. DXC Technology Co | STMicroelectronics vs. Polar Capital Technology | STMicroelectronics vs. Reckitt Benckiser Group |
| IShares Physical vs. Liberty Media Corp | IShares Physical vs. Zinc Media Group | IShares Physical vs. Ashtead Technology Holdings | IShares Physical vs. Check Point Software |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |