Correlation Between Globalfoundries and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Globalfoundries 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 Globalfoundries and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globalfoundries and STMicroelectronics NV ADR, you can compare the effects of market volatilities on Globalfoundries 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 Globalfoundries with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globalfoundries and STMicroelectronics.
Diversification Opportunities for Globalfoundries and STMicroelectronics
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Globalfoundries and STMicroelectronics is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries and STMicroelectronics NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics NV ADR and Globalfoundries 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 Globalfoundries 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 NV ADR has no effect on the direction of Globalfoundries i.e., Globalfoundries and STMicroelectronics go up and down completely randomly.
Pair Corralation between Globalfoundries and STMicroelectronics
Considering the 90-day investment horizon Globalfoundries is expected to generate 1.12 times more return on investment than STMicroelectronics. However, Globalfoundries is 1.12 times more volatile than STMicroelectronics NV ADR. It trades about -0.03 of its potential returns per unit of risk. STMicroelectronics NV ADR is currently generating about -0.1 per unit of risk. If you would invest 5,863 in Globalfoundries on September 14, 2024 and sell it today you would lose (1,486) from holding Globalfoundries or give up 25.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globalfoundries vs. STMicroelectronics NV ADR
Performance |
| Timeline |
| Globalfoundries |
| STMicroelectronics NV ADR |
Globalfoundries and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globalfoundries and STMicroelectronics
The main advantage of trading using opposite Globalfoundries and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalfoundries 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.| Globalfoundries vs. NXP Semiconductors NV | Globalfoundries vs. Analog Devices | Globalfoundries vs. ON Semiconductor | Globalfoundries vs. Lattice Semiconductor |
| STMicroelectronics vs. NXP Semiconductors NV | STMicroelectronics vs. Analog Devices | STMicroelectronics vs. ON Semiconductor | STMicroelectronics vs. Lattice Semiconductor |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |