Correlation Between Blackrock World and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Blackrock World 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 Blackrock World and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock World Mining and STMicroelectronics NV, you can compare the effects of market volatilities on Blackrock World 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 Blackrock World with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock World and STMicroelectronics.
Diversification Opportunities for Blackrock World and STMicroelectronics
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Blackrock and STMicroelectronics is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock World Mining and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Blackrock World 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 Blackrock World Mining 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 Blackrock World i.e., Blackrock World and STMicroelectronics go up and down completely randomly.
Pair Corralation between Blackrock World and STMicroelectronics
Assuming the 90 days trading horizon Blackrock World Mining is expected to generate 0.43 times more return on investment than STMicroelectronics. However, Blackrock World Mining is 2.3 times less risky than STMicroelectronics. It trades about 0.09 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.14 per unit of risk. If you would invest 48,600 in Blackrock World Mining on November 3, 2024 and sell it today you would earn a total of 1,100 from holding Blackrock World Mining or generate 2.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackrock World Mining vs. STMicroelectronics NV
Performance |
| Timeline |
| Blackrock World Mining |
| STMicroelectronics |
Blackrock World and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock World and STMicroelectronics
The main advantage of trading using opposite Blackrock World and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock World 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.| Blackrock World vs. Westlake Chemical Corp | Blackrock World vs. Zegona Communications Plc | Blackrock World vs. Beazer Homes USA | Blackrock World vs. Zoom Video Communications |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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