Correlation Between STMicroelectronics and NVIDIA
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and NVIDIA 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 NVIDIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and NVIDIA, you can compare the effects of market volatilities on STMicroelectronics and NVIDIA 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 NVIDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and NVIDIA.
Diversification Opportunities for STMicroelectronics and NVIDIA
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STMicroelectronics and NVIDIA is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and NVIDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA 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 NVIDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and NVIDIA go up and down completely randomly.
Pair Corralation between STMicroelectronics and NVIDIA
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the NVIDIA. In addition to that, STMicroelectronics is 1.06 times more volatile than NVIDIA. It trades about -0.11 of its total potential returns per unit of risk. NVIDIA is currently generating about 0.02 per unit of volatility. If you would invest 12,988 in NVIDIA on August 29, 2024 and sell it today you would earn a total of 82.00 from holding NVIDIA or generate 0.63% 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. NVIDIA
Performance |
| Timeline |
| STMicroelectronics |
| NVIDIA |
STMicroelectronics and NVIDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and NVIDIA
The main advantage of trading using opposite STMicroelectronics and NVIDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, NVIDIA 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 NVIDIA will offset losses from the drop in NVIDIA's long position.| STMicroelectronics vs. Align Technology | STMicroelectronics vs. JJ SNACK FOODS | STMicroelectronics vs. Wayside Technology Group | STMicroelectronics vs. Austevoll Seafood ASA |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |