Correlation Between Bellevue Healthcare and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Bellevue Healthcare 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 Bellevue Healthcare and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bellevue Healthcare Trust and STMicroelectronics NV, you can compare the effects of market volatilities on Bellevue Healthcare 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 Bellevue Healthcare with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bellevue Healthcare and STMicroelectronics.
Diversification Opportunities for Bellevue Healthcare and STMicroelectronics
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bellevue and STMicroelectronics is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bellevue Healthcare Trust and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Bellevue Healthcare 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 Bellevue Healthcare 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 Bellevue Healthcare i.e., Bellevue Healthcare and STMicroelectronics go up and down completely randomly.
Pair Corralation between Bellevue Healthcare and STMicroelectronics
Assuming the 90 days trading horizon Bellevue Healthcare Trust is expected to generate 0.5 times more return on investment than STMicroelectronics. However, Bellevue Healthcare Trust is 2.01 times less risky than STMicroelectronics. It trades about -0.02 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.13 per unit of risk. If you would invest 14,180 in Bellevue Healthcare Trust on August 31, 2024 and sell it today you would lose (80.00) from holding Bellevue Healthcare Trust or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bellevue Healthcare Trust vs. STMicroelectronics NV
Performance |
| Timeline |
| Bellevue Healthcare Trust |
| STMicroelectronics |
Bellevue Healthcare and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bellevue Healthcare and STMicroelectronics
The main advantage of trading using opposite Bellevue Healthcare and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bellevue Healthcare 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.| Bellevue Healthcare vs. Samsung Electronics Co | Bellevue Healthcare vs. Samsung Electronics Co | Bellevue Healthcare vs. Hyundai Motor | Bellevue Healthcare vs. Toyota Motor Corp |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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