Correlation Between Medical Properties and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Medical Properties and STMicroelectronics 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 Medical Properties and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medical Properties Trust and STMicroelectronics NV, you can compare the effects of market volatilities on Medical Properties and STMicroelectronics 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 Medical Properties with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and STMicroelectronics.
Diversification Opportunities for Medical Properties and STMicroelectronics
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Medical and STMicroelectronics is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Medical Properties 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 Medical Properties Trust are associated (or correlated) with STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of Medical Properties i.e., Medical Properties and STMicroelectronics go up and down completely randomly.
Pair Corralation between Medical Properties and STMicroelectronics
Assuming the 90 days trading horizon Medical Properties Trust is expected to generate 1.41 times more return on investment than STMicroelectronics. However, Medical Properties is 1.41 times more volatile than STMicroelectronics NV. It trades about -0.03 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.15 per unit of risk. If you would invest 531.00 in Medical Properties Trust on September 3, 2024 and sell it today you would lose (97.00) from holding Medical Properties Trust or give up 18.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Medical Properties Trust vs. STMicroelectronics NV
Performance |
| Timeline |
| Medical Properties Trust |
| STMicroelectronics |
Medical Properties and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Properties and STMicroelectronics
The main advantage of trading using opposite Medical Properties and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties position performs unexpectedly, STMicroelectronics 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 STMicroelectronics will offset losses from the drop in STMicroelectronics' long position.| Medical Properties vs. Catalyst Media Group | Medical Properties vs. CATLIN GROUP | Medical Properties vs. Magnora ASA | Medical Properties vs. RTW Venture Fund |
| STMicroelectronics vs. Deltex Medical Group | STMicroelectronics vs. Fevertree Drinks Plc | STMicroelectronics vs. Associated British Foods | STMicroelectronics vs. Medical Properties Trust |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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