Correlation Between STMicroelectronics and Power Integrations
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Power Integrations 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 Power Integrations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Power Integrations, you can compare the effects of market volatilities on STMicroelectronics and Power Integrations 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 Power Integrations. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Power Integrations.
Diversification Opportunities for STMicroelectronics and Power Integrations
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between STMicroelectronics and Power is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Power Integrations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Integrations 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 Power Integrations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Integrations has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Power Integrations go up and down completely randomly.
Pair Corralation between STMicroelectronics and Power Integrations
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the Power Integrations. In addition to that, STMicroelectronics is 1.33 times more volatile than Power Integrations. It trades about -0.08 of its total potential returns per unit of risk. Power Integrations is currently generating about 0.03 per unit of volatility. If you would invest 6,481 in Power Integrations on August 29, 2024 and sell it today you would earn a total of 85.00 from holding Power Integrations or generate 1.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Power Integrations
Performance |
| Timeline |
| STMicroelectronics |
| Power Integrations |
STMicroelectronics and Power Integrations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Power Integrations
The main advantage of trading using opposite STMicroelectronics and Power Integrations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Power Integrations 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 Power Integrations will offset losses from the drop in Power Integrations' long position.| STMicroelectronics vs. Silicon Laboratories | STMicroelectronics vs. Power Integrations | STMicroelectronics vs. Diodes Incorporated | STMicroelectronics vs. MaxLinear |
| Power Integrations vs. Diodes Incorporated | Power Integrations vs. MACOM Technology Solutions | Power Integrations vs. Cirrus Logic | Power Integrations vs. Amkor Technology |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |