Correlation Between STMicroelectronics and J+J SNACK
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and J+J SNACK 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 J+J SNACK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and JJ SNACK FOODS, you can compare the effects of market volatilities on STMicroelectronics and J+J SNACK 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 J+J SNACK. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and J+J SNACK.
Diversification Opportunities for STMicroelectronics and J+J SNACK
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STMicroelectronics and J+J is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and JJ SNACK FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJ SNACK FOODS 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 J+J SNACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJ SNACK FOODS has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and J+J SNACK go up and down completely randomly.
Pair Corralation between STMicroelectronics and J+J SNACK
Assuming the 90 days horizon STMicroelectronics NV is expected to generate 1.33 times more return on investment than J+J SNACK. However, STMicroelectronics is 1.33 times more volatile than JJ SNACK FOODS. It trades about 0.02 of its potential returns per unit of risk. JJ SNACK FOODS is currently generating about -0.18 per unit of risk. If you would invest 2,421 in STMicroelectronics NV on November 30, 2024 and sell it today you would earn a total of 15.00 from holding STMicroelectronics NV or generate 0.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
STMicroelectronics NV vs. JJ SNACK FOODS
Performance |
| Timeline |
| STMicroelectronics |
| JJ SNACK FOODS |
STMicroelectronics and J+J SNACK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and J+J SNACK
The main advantage of trading using opposite STMicroelectronics and J+J SNACK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, J+J SNACK 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 J+J SNACK will offset losses from the drop in J+J SNACK's long position.| STMicroelectronics vs. Verizon Communications | STMicroelectronics vs. Computershare Limited | STMicroelectronics vs. Fast Retailing Co | STMicroelectronics vs. GOME Retail Holdings |
| J+J SNACK vs. Gol Intelligent Airlines | J+J SNACK vs. AEGEAN AIRLINES | J+J SNACK vs. Scandinavian Tobacco Group | J+J SNACK vs. Virtu Financial |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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