Correlation Between SBF 120 and STMicroelectronics
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By analyzing existing cross correlation between SBF 120 and STMicroelectronics NV, you can compare the effects of market volatilities on SBF 120 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 SBF 120 with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBF 120 and STMicroelectronics.
Diversification Opportunities for SBF 120 and STMicroelectronics
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SBF and STMicroelectronics is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SBF 120 and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and SBF 120 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 SBF 120 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 SBF 120 i.e., SBF 120 and STMicroelectronics go up and down completely randomly.
Pair Corralation between SBF 120 and STMicroelectronics
Assuming the 90 days trading horizon SBF 120 is expected to generate 0.38 times more return on investment than STMicroelectronics. However, SBF 120 is 2.62 times less risky than STMicroelectronics. It trades about -0.23 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.13 per unit of risk. If you would invest 572,831 in SBF 120 on August 29, 2024 and sell it today you would lose (27,034) from holding SBF 120 or give up 4.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBF 120 vs. STMicroelectronics NV
Performance |
| Timeline |
SBF 120 and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
SBF 120
Pair trading matchups for SBF 120
STMicroelectronics NV
Pair trading matchups for STMicroelectronics
Pair Trading with SBF 120 and STMicroelectronics
The main advantage of trading using opposite SBF 120 and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBF 120 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.| SBF 120 vs. Linedata Services SA | SBF 120 vs. Mauna Kea Technologies | SBF 120 vs. Eutelsat Communications SA | SBF 120 vs. ZCCM Investments Holdings |
| STMicroelectronics vs. LVMH Mot Hennessy | STMicroelectronics vs. LOreal SA | STMicroelectronics vs. Hermes International SCA | STMicroelectronics vs. Manitou BF SA |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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