Correlation Between CITY OFFICE and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both CITY OFFICE 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 CITY OFFICE and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITY OFFICE REIT and STMicroelectronics NV, you can compare the effects of market volatilities on CITY OFFICE 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 CITY OFFICE with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITY OFFICE and STMicroelectronics.
Diversification Opportunities for CITY OFFICE and STMicroelectronics
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between CITY and STMicroelectronics is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and CITY OFFICE 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 CITY OFFICE REIT 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 CITY OFFICE i.e., CITY OFFICE and STMicroelectronics go up and down completely randomly.
Pair Corralation between CITY OFFICE and STMicroelectronics
Assuming the 90 days horizon CITY OFFICE REIT is expected to generate 1.53 times more return on investment than STMicroelectronics. However, CITY OFFICE is 1.53 times more volatile than STMicroelectronics NV. It trades about 0.24 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.13 per unit of risk. If you would invest 472.00 in CITY OFFICE REIT on August 31, 2024 and sell it today you would earn a total of 88.00 from holding CITY OFFICE REIT or generate 18.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITY OFFICE REIT vs. STMicroelectronics NV
Performance |
| Timeline |
| CITY OFFICE REIT |
| STMicroelectronics |
CITY OFFICE and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITY OFFICE and STMicroelectronics
The main advantage of trading using opposite CITY OFFICE and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITY OFFICE 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.| CITY OFFICE vs. Columbia Sportswear | CITY OFFICE vs. INTERSHOP Communications Aktiengesellschaft | CITY OFFICE vs. Charter Communications | CITY OFFICE vs. KOOL2PLAY SA ZY |
| STMicroelectronics vs. NVIDIA | STMicroelectronics vs. Taiwan Semiconductor Manufacturing | STMicroelectronics vs. Advanced Micro Devices | STMicroelectronics vs. Intel |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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