Correlation Between STMICROELECTRONICS and WFD Unibail
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS and WFD Unibail 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 STMICROELECTRONICS and WFD Unibail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and WFD Unibail Rodamco, you can compare the effects of market volatilities on STMICROELECTRONICS and WFD Unibail 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 STMICROELECTRONICS with a short position of WFD Unibail. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and WFD Unibail.
Diversification Opportunities for STMICROELECTRONICS and WFD Unibail
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STMICROELECTRONICS and WFD is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and WFD Unibail Rodamco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WFD Unibail Rodamco and STMICROELECTRONICS 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 STMICROELECTRONICS are associated (or correlated) with WFD Unibail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WFD Unibail Rodamco has no effect on the direction of STMICROELECTRONICS i.e., STMICROELECTRONICS and WFD Unibail go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and WFD Unibail
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to generate 1.15 times more return on investment than WFD Unibail. However, STMICROELECTRONICS is 1.15 times more volatile than WFD Unibail Rodamco. It trades about 0.02 of its potential returns per unit of risk. WFD Unibail Rodamco is currently generating about -0.01 per unit of risk. If you would invest 2,485 in STMICROELECTRONICS on September 12, 2024 and sell it today you would earn a total of 14.00 from holding STMICROELECTRONICS or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMICROELECTRONICS vs. WFD Unibail Rodamco
Performance |
| Timeline |
| STMICROELECTRONICS |
| WFD Unibail Rodamco |
STMICROELECTRONICS and WFD Unibail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and WFD Unibail
The main advantage of trading using opposite STMICROELECTRONICS and WFD Unibail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS position performs unexpectedly, WFD Unibail 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 WFD Unibail will offset losses from the drop in WFD Unibail's long position.| STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc |
| WFD Unibail vs. URW EO 05 | WFD Unibail vs. Capital Counties Properties | WFD Unibail vs. FREY EO 250 | WFD Unibail vs. SERITAGE GWTH PRA |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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