Correlation Between STMicroelectronics and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Insurance Australia 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 Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Insurance Australia Group, you can compare the effects of market volatilities on STMicroelectronics and Insurance Australia 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 Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Insurance Australia.
Diversification Opportunities for STMicroelectronics and Insurance Australia
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between STMicroelectronics and Insurance is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia 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 Insurance Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insurance Australia has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Insurance Australia go up and down completely randomly.
Pair Corralation between STMicroelectronics and Insurance Australia
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the Insurance Australia. In addition to that, STMicroelectronics is 1.39 times more volatile than Insurance Australia Group. It trades about -0.02 of its total potential returns per unit of risk. Insurance Australia Group is currently generating about 0.09 per unit of volatility. If you would invest 266.00 in Insurance Australia Group on September 5, 2024 and sell it today you would earn a total of 249.00 from holding Insurance Australia Group or generate 93.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Insurance Australia Group
Performance |
| Timeline |
| STMicroelectronics |
| Insurance Australia |
STMicroelectronics and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Insurance Australia
The main advantage of trading using opposite STMicroelectronics and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Insurance Australia 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 Insurance Australia will offset losses from the drop in Insurance Australia's long position.| STMicroelectronics vs. NVIDIA | STMicroelectronics vs. Taiwan Semiconductor Manufacturing | STMicroelectronics vs. Advanced Micro Devices | STMicroelectronics vs. Intel |
| Insurance Australia vs. AEON STORES | Insurance Australia vs. FUYO GENERAL LEASE | Insurance Australia vs. United Rentals | Insurance Australia vs. SPARTAN STORES |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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