Correlation Between STMicroelectronics and National Storage
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and National Storage 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 National Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and National Storage Affiliates, you can compare the effects of market volatilities on STMicroelectronics and National Storage 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 National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and National Storage.
Diversification Opportunities for STMicroelectronics and National Storage
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between STMicroelectronics and National is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and National Storage Affiliates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storage Aff 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 NV are associated (or correlated) with National Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Storage Aff has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and National Storage go up and down completely randomly.
Pair Corralation between STMicroelectronics and National Storage
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the National Storage. In addition to that, STMicroelectronics is 1.47 times more volatile than National Storage Affiliates. It trades about -0.11 of its total potential returns per unit of risk. National Storage Affiliates is currently generating about 0.12 per unit of volatility. If you would invest 3,238 in National Storage Affiliates on September 3, 2024 and sell it today you would earn a total of 1,032 from holding National Storage Affiliates or generate 31.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. National Storage Affiliates
Performance |
| Timeline |
| STMicroelectronics |
| National Storage Aff |
STMicroelectronics and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and National Storage
The main advantage of trading using opposite STMicroelectronics and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, National Storage 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 National Storage will offset losses from the drop in National Storage's long position.| STMicroelectronics vs. Align Technology | STMicroelectronics vs. Micron Technology | STMicroelectronics vs. Fukuyama Transporting Co | STMicroelectronics vs. FANDIFI TECHNOLOGY P |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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