Correlation Between Power Integrations and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Power Integrations 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 Power Integrations and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Integrations and STMicroelectronics NV, you can compare the effects of market volatilities on Power Integrations 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 Power Integrations with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Integrations and STMicroelectronics.
Diversification Opportunities for Power Integrations and STMicroelectronics
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Power and STMicroelectronics is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Power Integrations and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Power Integrations 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 Power Integrations 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 Power Integrations i.e., Power Integrations and STMicroelectronics go up and down completely randomly.
Pair Corralation between Power Integrations and STMicroelectronics
Given the investment horizon of 90 days Power Integrations is expected to generate 0.75 times more return on investment than STMicroelectronics. However, Power Integrations is 1.33 times less risky than STMicroelectronics. It trades about 0.03 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.08 per unit of risk. If you would invest 6,481 in Power Integrations on August 29, 2024 and sell it today you would earn a total of 85.00 from holding Power Integrations or generate 1.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Integrations vs. STMicroelectronics NV
Performance |
| Timeline |
| Power Integrations |
| STMicroelectronics |
Power Integrations and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Integrations and STMicroelectronics
The main advantage of trading using opposite Power Integrations and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Integrations 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.| Power Integrations vs. Diodes Incorporated | Power Integrations vs. MACOM Technology Solutions | Power Integrations vs. Cirrus Logic | Power Integrations vs. Amkor Technology |
| STMicroelectronics vs. Silicon Laboratories | STMicroelectronics vs. Power Integrations | STMicroelectronics vs. Diodes Incorporated | STMicroelectronics vs. MaxLinear |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |