Correlation Between STMICROELECTRONICS and Corporate Travel
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS and Corporate Travel 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 Corporate Travel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and Corporate Travel Management, you can compare the effects of market volatilities on STMICROELECTRONICS and Corporate Travel 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 Corporate Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and Corporate Travel.
Diversification Opportunities for STMICROELECTRONICS and Corporate Travel
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between STMICROELECTRONICS and Corporate is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and Corporate Travel Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Travel Man 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 Corporate Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Travel Man has no effect on the direction of STMICROELECTRONICS i.e., STMICROELECTRONICS and Corporate Travel go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and Corporate Travel
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to generate 0.99 times more return on investment than Corporate Travel. However, STMICROELECTRONICS is 1.01 times less risky than Corporate Travel. It trades about -0.05 of its potential returns per unit of risk. Corporate Travel Management is currently generating about -0.19 per unit of risk. If you would invest 2,503 in STMICROELECTRONICS on October 11, 2024 and sell it today you would lose (57.00) from holding STMICROELECTRONICS or give up 2.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMICROELECTRONICS vs. Corporate Travel Management
Performance |
| Timeline |
| STMICROELECTRONICS |
| Corporate Travel Man |
STMICROELECTRONICS and Corporate Travel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and Corporate Travel
The main advantage of trading using opposite STMICROELECTRONICS and Corporate Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS position performs unexpectedly, Corporate Travel 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 Corporate Travel will offset losses from the drop in Corporate Travel's long position.| STMICROELECTRONICS vs. Wyndham Hotels Resorts | STMICROELECTRONICS vs. Choice Hotels International | STMICROELECTRONICS vs. Summit Hotel Properties | STMICROELECTRONICS vs. Webster Financial |
| Corporate Travel vs. BORR DRILLING NEW | Corporate Travel vs. STMICROELECTRONICS | Corporate Travel vs. PennyMac Mortgage Investment | Corporate Travel vs. KIMBALL ELECTRONICS |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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