Correlation Between Polar Capital and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Polar Capital 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 Polar Capital and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polar Capital Technology and STMicroelectronics NV, you can compare the effects of market volatilities on Polar Capital 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 Polar Capital with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and STMicroelectronics.
Diversification Opportunities for Polar Capital and STMicroelectronics
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Polar and STMicroelectronics is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Polar Capital 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 Polar Capital Technology 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 Polar Capital i.e., Polar Capital and STMicroelectronics go up and down completely randomly.
Pair Corralation between Polar Capital and STMicroelectronics
Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 0.57 times more return on investment than STMicroelectronics. However, Polar Capital Technology is 1.76 times less risky than STMicroelectronics. It trades about 0.05 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.03 per unit of risk. If you would invest 33,700 in Polar Capital Technology on September 13, 2024 and sell it today you would earn a total of 400.00 from holding Polar Capital Technology or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polar Capital Technology vs. STMicroelectronics NV
Performance |
| Timeline |
| Polar Capital Technology |
| STMicroelectronics |
Polar Capital and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and STMicroelectronics
The main advantage of trading using opposite Polar Capital and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital 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.| Polar Capital vs. Catalyst Media Group | Polar Capital vs. CATLIN GROUP | Polar Capital vs. Tamburi Investment Partners | Polar Capital vs. Magnora ASA |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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