Correlation Between STMicroelectronics and Science Applications
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Science Applications 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 Science Applications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Science Applications International, you can compare the effects of market volatilities on STMicroelectronics and Science Applications 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 Science Applications. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Science Applications.
Diversification Opportunities for STMicroelectronics and Science Applications
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between STMicroelectronics and Science is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Science Applications Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Applications 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 Science Applications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Applications has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Science Applications go up and down completely randomly.
Pair Corralation between STMicroelectronics and Science Applications
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the Science Applications. In addition to that, STMicroelectronics is 1.16 times more volatile than Science Applications International. It trades about -0.11 of its total potential returns per unit of risk. Science Applications International is currently generating about -0.01 per unit of volatility. If you would invest 12,222 in Science Applications International on September 3, 2024 and sell it today you would lose (622.00) from holding Science Applications International or give up 5.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Science Applications Internati
Performance |
| Timeline |
| STMicroelectronics |
| Science Applications |
STMicroelectronics and Science Applications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Science Applications
The main advantage of trading using opposite STMicroelectronics and Science Applications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Science Applications 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 Science Applications will offset losses from the drop in Science Applications' long position.| STMicroelectronics vs. Align Technology | STMicroelectronics vs. Micron Technology | STMicroelectronics vs. Fukuyama Transporting Co | STMicroelectronics vs. FANDIFI TECHNOLOGY P |
| Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications vs. Apple Inc |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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