Correlation Between STMicroelectronics and COSTCO WHOLESALE
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and COSTCO WHOLESALE 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 COSTCO WHOLESALE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and COSTCO WHOLESALE CDR, you can compare the effects of market volatilities on STMicroelectronics and COSTCO WHOLESALE 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 COSTCO WHOLESALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and COSTCO WHOLESALE.
Diversification Opportunities for STMicroelectronics and COSTCO WHOLESALE
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STMicroelectronics and COSTCO is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and COSTCO WHOLESALE CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTCO WHOLESALE CDR 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 COSTCO WHOLESALE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSTCO WHOLESALE CDR has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and COSTCO WHOLESALE go up and down completely randomly.
Pair Corralation between STMicroelectronics and COSTCO WHOLESALE
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the COSTCO WHOLESALE. In addition to that, STMicroelectronics is 1.34 times more volatile than COSTCO WHOLESALE CDR. It trades about -0.04 of its total potential returns per unit of risk. COSTCO WHOLESALE CDR is currently generating about 0.07 per unit of volatility. If you would invest 2,715 in COSTCO WHOLESALE CDR on October 26, 2024 and sell it today you would earn a total of 165.00 from holding COSTCO WHOLESALE CDR or generate 6.08% 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. COSTCO WHOLESALE CDR
Performance |
| Timeline |
| STMicroelectronics |
| COSTCO WHOLESALE CDR |
STMicroelectronics and COSTCO WHOLESALE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and COSTCO WHOLESALE
The main advantage of trading using opposite STMicroelectronics and COSTCO WHOLESALE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, COSTCO WHOLESALE 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 COSTCO WHOLESALE will offset losses from the drop in COSTCO WHOLESALE's long position.| STMicroelectronics vs. Gaming and Leisure | STMicroelectronics vs. Corsair Gaming | STMicroelectronics vs. ANTA SPORTS PRODUCT | STMicroelectronics vs. Games Workshop Group |
| COSTCO WHOLESALE vs. Walmart | COSTCO WHOLESALE vs. Walmart | COSTCO WHOLESALE vs. Costco Wholesale | COSTCO WHOLESALE vs. Target |
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 CEOs Directory module to screen CEOs from public companies around the world.
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