Correlation Between Ubisoft Entertainment and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Ubisoft Entertainment 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 Ubisoft Entertainment and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ubisoft Entertainment and STMicroelectronics NV, you can compare the effects of market volatilities on Ubisoft Entertainment 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 Ubisoft Entertainment with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ubisoft Entertainment and STMicroelectronics.
Diversification Opportunities for Ubisoft Entertainment and STMicroelectronics
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ubisoft and STMicroelectronics is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ubisoft Entertainment and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Ubisoft Entertainment 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 Ubisoft Entertainment 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 Ubisoft Entertainment i.e., Ubisoft Entertainment and STMicroelectronics go up and down completely randomly.
Pair Corralation between Ubisoft Entertainment and STMicroelectronics
Assuming the 90 days trading horizon Ubisoft Entertainment is expected to under-perform the STMicroelectronics. In addition to that, Ubisoft Entertainment is 1.13 times more volatile than STMicroelectronics NV. It trades about -0.25 of its total potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.28 per unit of volatility. If you would invest 2,506 in STMicroelectronics NV on November 6, 2024 and sell it today you would lose (326.00) from holding STMicroelectronics NV or give up 13.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ubisoft Entertainment vs. STMicroelectronics NV
Performance |
| Timeline |
| Ubisoft Entertainment |
| STMicroelectronics |
Ubisoft Entertainment and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ubisoft Entertainment and STMicroelectronics
The main advantage of trading using opposite Ubisoft Entertainment and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ubisoft Entertainment 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.| Ubisoft Entertainment vs. Zoom Video Communications | Ubisoft Entertainment vs. DFS Furniture PLC | Ubisoft Entertainment vs. Cairn Homes PLC | Ubisoft Entertainment vs. Pets at Home |
| STMicroelectronics vs. Alliance Data Systems | STMicroelectronics vs. Extra Space Storage | STMicroelectronics vs. GlobalData PLC | STMicroelectronics vs. Odfjell Drilling |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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