Correlation Between STMicroelectronics and ERSTE GP
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and ERSTE GP 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 ERSTE GP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and ERSTE GP BNK, you can compare the effects of market volatilities on STMicroelectronics and ERSTE GP 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 ERSTE GP. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and ERSTE GP.
Diversification Opportunities for STMicroelectronics and ERSTE GP
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STMicroelectronics and ERSTE is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and ERSTE GP BNK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ERSTE GP BNK 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 ERSTE GP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ERSTE GP BNK has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and ERSTE GP go up and down completely randomly.
Pair Corralation between STMicroelectronics and ERSTE GP
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the ERSTE GP. In addition to that, STMicroelectronics is 1.36 times more volatile than ERSTE GP BNK. It trades about -0.11 of its total potential returns per unit of risk. ERSTE GP BNK is currently generating about 0.05 per unit of volatility. If you would invest 2,500 in ERSTE GP BNK on August 29, 2024 and sell it today you would earn a total of 40.00 from holding ERSTE GP BNK or generate 1.6% 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. ERSTE GP BNK
Performance |
| Timeline |
| STMicroelectronics |
| ERSTE GP BNK |
STMicroelectronics and ERSTE GP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and ERSTE GP
The main advantage of trading using opposite STMicroelectronics and ERSTE GP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, ERSTE GP 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 ERSTE GP will offset losses from the drop in ERSTE GP's long position.| STMicroelectronics vs. Align Technology | STMicroelectronics vs. JJ SNACK FOODS | STMicroelectronics vs. Wayside Technology Group | STMicroelectronics vs. Austevoll Seafood ASA |
| ERSTE GP vs. NORTHEAST UTILITIES | ERSTE GP vs. STMicroelectronics NV | ERSTE GP vs. LGI Homes | ERSTE GP vs. BYD ELECTRONIC |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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