Correlation Between STMicroelectronics and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Algonquin Power 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 Algonquin Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Algonquin Power Utilities, you can compare the effects of market volatilities on STMicroelectronics and Algonquin Power 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 Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Algonquin Power.
Diversification Opportunities for STMicroelectronics and Algonquin Power
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between STMicroelectronics and Algonquin is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Algonquin Power Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algonquin Power Utilities 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 Algonquin Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algonquin Power Utilities has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Algonquin Power go up and down completely randomly.
Pair Corralation between STMicroelectronics and Algonquin Power
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the Algonquin Power. In addition to that, STMicroelectronics is 1.22 times more volatile than Algonquin Power Utilities. It trades about -0.05 of its total potential returns per unit of risk. Algonquin Power Utilities is currently generating about -0.03 per unit of volatility. If you would invest 608.00 in Algonquin Power Utilities on August 27, 2024 and sell it today you would lose (156.00) from holding Algonquin Power Utilities or give up 25.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Algonquin Power Utilities
Performance |
| Timeline |
| STMicroelectronics |
| Algonquin Power Utilities |
STMicroelectronics and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Algonquin Power
The main advantage of trading using opposite STMicroelectronics and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Algonquin Power 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 Algonquin Power will offset losses from the drop in Algonquin Power's long position.| STMicroelectronics vs. NVIDIA | STMicroelectronics vs. NVIDIA | STMicroelectronics vs. QUALCOMM Incorporated | STMicroelectronics vs. Intel |
| Algonquin Power vs. Bausch Health Companies | Algonquin Power vs. YOOMA WELLNESS INC | Algonquin Power vs. Boyd Gaming | Algonquin Power vs. NORDHEALTH AS NK |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |