Correlation Between MAVEN WIRELESS and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both MAVEN WIRELESS 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 MAVEN WIRELESS and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAVEN WIRELESS SWEDEN and STMicroelectronics NV, you can compare the effects of market volatilities on MAVEN WIRELESS 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 MAVEN WIRELESS with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAVEN WIRELESS and STMicroelectronics.
Diversification Opportunities for MAVEN WIRELESS and STMicroelectronics
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MAVEN and STMicroelectronics is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding MAVEN WIRELESS SWEDEN and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and MAVEN WIRELESS 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 MAVEN WIRELESS SWEDEN 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 MAVEN WIRELESS i.e., MAVEN WIRELESS and STMicroelectronics go up and down completely randomly.
Pair Corralation between MAVEN WIRELESS and STMicroelectronics
Assuming the 90 days horizon MAVEN WIRELESS SWEDEN is expected to generate 1.33 times more return on investment than STMicroelectronics. However, MAVEN WIRELESS is 1.33 times more volatile than STMicroelectronics NV. It trades about 0.16 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.11 per unit of risk. If you would invest 89.00 in MAVEN WIRELESS SWEDEN on November 4, 2024 and sell it today you would earn a total of 13.00 from holding MAVEN WIRELESS SWEDEN or generate 14.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAVEN WIRELESS SWEDEN vs. STMicroelectronics NV
Performance |
| Timeline |
| MAVEN WIRELESS SWEDEN |
| STMicroelectronics |
MAVEN WIRELESS and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAVEN WIRELESS and STMicroelectronics
The main advantage of trading using opposite MAVEN WIRELESS and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAVEN WIRELESS 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.| MAVEN WIRELESS vs. BAKED GAMES SA | MAVEN WIRELESS vs. GAMES OPERATORS SA | MAVEN WIRELESS vs. IMPERIAL TOBACCO | MAVEN WIRELESS vs. Phibro Animal Health |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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