Correlation Between STMicroelectronics and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Chesapeake Utilities 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 Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Chesapeake Utilities, you can compare the effects of market volatilities on STMicroelectronics and Chesapeake Utilities 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 Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Chesapeake Utilities.
Diversification Opportunities for STMicroelectronics and Chesapeake Utilities
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STMicroelectronics and Chesapeake is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake 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 Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between STMicroelectronics and Chesapeake Utilities
Assuming the 90 days horizon STMicroelectronics is expected to generate 1.61 times less return on investment than Chesapeake Utilities. In addition to that, STMicroelectronics is 2.19 times more volatile than Chesapeake Utilities. It trades about 0.08 of its total potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.27 per unit of volatility. If you would invest 11,400 in Chesapeake Utilities on October 23, 2024 and sell it today you would earn a total of 600.00 from holding Chesapeake Utilities or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Chesapeake Utilities
Performance |
| Timeline |
| STMicroelectronics |
| Chesapeake Utilities |
STMicroelectronics and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Chesapeake Utilities
The main advantage of trading using opposite STMicroelectronics and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Chesapeake Utilities 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.| STMicroelectronics vs. Thai Beverage Public | STMicroelectronics vs. SCOTT TECHNOLOGY | STMicroelectronics vs. SENECA FOODS A | STMicroelectronics vs. Micron Technology |
| Chesapeake Utilities vs. STMicroelectronics NV | Chesapeake Utilities vs. SOUTHWEST AIRLINES | Chesapeake Utilities vs. Richardson Electronics | Chesapeake Utilities vs. Renesas 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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