Correlation Between SWISS WATER and STMICROELECTRONICS
Can any of the company-specific risk be diversified away by investing in both SWISS WATER 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 SWISS WATER and STMICROELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SWISS WATER DECAFFCOFFEE and STMICROELECTRONICS, you can compare the effects of market volatilities on SWISS WATER 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 SWISS WATER with a short position of STMICROELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWISS WATER and STMICROELECTRONICS.
Diversification Opportunities for SWISS WATER and STMICROELECTRONICS
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SWISS and STMICROELECTRONICS is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding SWISS WATER DECAFFCOFFEE and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS and SWISS WATER 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 SWISS WATER DECAFFCOFFEE 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 SWISS WATER i.e., SWISS WATER and STMICROELECTRONICS go up and down completely randomly.
Pair Corralation between SWISS WATER and STMICROELECTRONICS
Assuming the 90 days horizon SWISS WATER DECAFFCOFFEE is expected to under-perform the STMICROELECTRONICS. In addition to that, SWISS WATER is 1.47 times more volatile than STMICROELECTRONICS. It trades about -0.21 of its total potential returns per unit of risk. STMICROELECTRONICS is currently generating about -0.06 per unit of volatility. If you would invest 2,451 in STMICROELECTRONICS on October 30, 2024 and sell it today you would lose (71.00) from holding STMICROELECTRONICS or give up 2.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SWISS WATER DECAFFCOFFEE vs. STMICROELECTRONICS
Performance |
| Timeline |
| SWISS WATER DECAFFCOFFEE |
| STMICROELECTRONICS |
SWISS WATER and STMICROELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SWISS WATER and STMICROELECTRONICS
The main advantage of trading using opposite SWISS WATER and STMICROELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWISS WATER 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's long position.| SWISS WATER vs. China Railway Construction | SWISS WATER vs. WIMFARM SA EO | SWISS WATER vs. Daito Trust Construction | SWISS WATER vs. Dairy Farm International |
| STMICROELECTRONICS vs. Corsair Gaming | STMICROELECTRONICS vs. Mitsui Chemicals | STMICROELECTRONICS vs. KINGBOARD CHEMICAL | STMICROELECTRONICS vs. AIR PRODCHEMICALS |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |