Correlation Between STMicroelectronics and ON Semiconductor
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and ON Semiconductor 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 ON Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and ON Semiconductor, you can compare the effects of market volatilities on STMicroelectronics and ON Semiconductor 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 ON Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and ON Semiconductor.
Diversification Opportunities for STMicroelectronics and ON Semiconductor
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between STMicroelectronics and O2NS34 is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and ON Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON Semiconductor 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 ON Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON Semiconductor has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and ON Semiconductor go up and down completely randomly.
Pair Corralation between STMicroelectronics and ON Semiconductor
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the ON Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, STMicroelectronics NV is 5.56 times less risky than ON Semiconductor. The stock trades about -0.21 of its potential returns per unit of risk. The ON Semiconductor is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 3,052 in ON Semiconductor on October 20, 2025 and sell it today you would earn a total of 1,079 from holding ON Semiconductor or generate 35.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.44% |
| Values | Daily Returns |
STMicroelectronics NV vs. ON Semiconductor
Performance |
| Timeline |
| STMicroelectronics |
| ON Semiconductor |
STMicroelectronics and ON Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and ON Semiconductor
The main advantage of trading using opposite STMicroelectronics and ON Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, ON Semiconductor 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 ON Semiconductor will offset losses from the drop in ON Semiconductor's long position.| STMicroelectronics vs. Teladoc Health | STMicroelectronics vs. Fidelity National Information | STMicroelectronics vs. Universal Health Services | STMicroelectronics vs. HCA Healthcare |
| ON Semiconductor vs. Mitsubishi UFJ Financial | ON Semiconductor vs. Prudential Financial | ON Semiconductor vs. Credit Acceptance | ON Semiconductor vs. Jefferies Financial Group |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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