Correlation Between STMicroelectronics and Oxford Technology
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Oxford Technology 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 Oxford Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Oxford Technology 2, you can compare the effects of market volatilities on STMicroelectronics and Oxford Technology 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 Oxford Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Oxford Technology.
Diversification Opportunities for STMicroelectronics and Oxford Technology
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between STMicroelectronics and Oxford is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Oxford Technology 2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Technology 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 Oxford Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Technology has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Oxford Technology go up and down completely randomly.
Pair Corralation between STMicroelectronics and Oxford Technology
Assuming the 90 days trading horizon STMicroelectronics NV is expected to generate 1.06 times more return on investment than Oxford Technology. However, STMicroelectronics is 1.06 times more volatile than Oxford Technology 2. It trades about -0.02 of its potential returns per unit of risk. Oxford Technology 2 is currently generating about -0.12 per unit of risk. If you would invest 3,509 in STMicroelectronics NV on September 5, 2024 and sell it today you would lose (1,076) from holding STMicroelectronics NV or give up 30.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
STMicroelectronics NV vs. Oxford Technology 2
Performance |
| Timeline |
| STMicroelectronics |
| Oxford Technology |
STMicroelectronics and Oxford Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Oxford Technology
The main advantage of trading using opposite STMicroelectronics and Oxford Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Oxford Technology 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 Oxford Technology will offset losses from the drop in Oxford Technology's long position.| STMicroelectronics vs. State Street Corp | STMicroelectronics vs. DXC Technology Co | STMicroelectronics vs. Polar Capital Technology | STMicroelectronics vs. Reckitt Benckiser Group |
| Oxford Technology vs. Samsung Electronics Co | Oxford Technology vs. Samsung Electronics Co | Oxford Technology vs. Hyundai Motor | Oxford Technology vs. Toyota Motor Corp |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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