Correlation Between STMicroelectronics and Tatton Asset
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Tatton Asset 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 Tatton Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Tatton Asset Management, you can compare the effects of market volatilities on STMicroelectronics and Tatton Asset 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 Tatton Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Tatton Asset.
Diversification Opportunities for STMicroelectronics and Tatton Asset
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STMicroelectronics and Tatton is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Tatton Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tatton Asset Management 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 Tatton Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tatton Asset Management has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Tatton Asset go up and down completely randomly.
Pair Corralation between STMicroelectronics and Tatton Asset
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the Tatton Asset. In addition to that, STMicroelectronics is 1.62 times more volatile than Tatton Asset Management. It trades about -0.04 of its total potential returns per unit of risk. Tatton Asset Management is currently generating about -0.02 per unit of volatility. If you would invest 69,000 in Tatton Asset Management on October 11, 2024 and sell it today you would lose (600.00) from holding Tatton Asset Management or give up 0.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Tatton Asset Management
Performance |
| Timeline |
| STMicroelectronics |
| Tatton Asset Management |
STMicroelectronics and Tatton Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Tatton Asset
The main advantage of trading using opposite STMicroelectronics and Tatton Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Tatton Asset 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 Tatton Asset will offset losses from the drop in Tatton Asset's long position.| STMicroelectronics vs. Cairo Communication SpA | STMicroelectronics vs. Infrastrutture Wireless Italiane | STMicroelectronics vs. Compagnie Plastic Omnium | STMicroelectronics vs. Seche Environnement SA |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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