Correlation Between STMicroelectronics and Spectra Systems
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Spectra Systems 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 Spectra Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Spectra Systems Corp, you can compare the effects of market volatilities on STMicroelectronics and Spectra Systems 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 Spectra Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Spectra Systems.
Diversification Opportunities for STMicroelectronics and Spectra Systems
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STMicroelectronics and Spectra is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Spectra Systems Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectra Systems Corp 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 Spectra Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectra Systems Corp has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Spectra Systems go up and down completely randomly.
Pair Corralation between STMicroelectronics and Spectra Systems
Assuming the 90 days trading horizon STMicroelectronics NV is expected to generate 1.86 times more return on investment than Spectra Systems. However, STMicroelectronics is 1.86 times more volatile than Spectra Systems Corp. It trades about 0.0 of its potential returns per unit of risk. Spectra Systems Corp is currently generating about 0.0 per unit of risk. If you would invest 2,413 in STMicroelectronics NV on November 30, 2024 and sell it today you would lose (44.00) from holding STMicroelectronics NV or give up 1.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Spectra Systems Corp
Performance |
| Timeline |
| STMicroelectronics |
| Spectra Systems Corp |
STMicroelectronics and Spectra Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Spectra Systems
The main advantage of trading using opposite STMicroelectronics and Spectra Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Spectra Systems 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 Spectra Systems will offset losses from the drop in Spectra Systems' long position.| STMicroelectronics vs. Travel Leisure Co | STMicroelectronics vs. Zoom Video Communications | STMicroelectronics vs. Coeur Mining | STMicroelectronics vs. Playtech Plc |
| Spectra Systems vs. Zegona Communications Plc | Spectra Systems vs. EJF Investments | Spectra Systems vs. Lindsell Train Investment | Spectra Systems vs. United Internet AG |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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