Correlation Between STMicroelectronics and Public Storage
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Public Storage 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 Public Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Public Storage, you can compare the effects of market volatilities on STMicroelectronics and Public Storage 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 Public Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Public Storage.
Diversification Opportunities for STMicroelectronics and Public Storage
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between STMicroelectronics and Public is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage 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 Public Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Storage has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Public Storage go up and down completely randomly.
Pair Corralation between STMicroelectronics and Public Storage
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the Public Storage. In addition to that, STMicroelectronics is 1.58 times more volatile than Public Storage. It trades about -0.04 of its total potential returns per unit of risk. Public Storage is currently generating about 0.03 per unit of volatility. If you would invest 29,420 in Public Storage on October 25, 2024 and sell it today you would earn a total of 6,724 from holding Public Storage or generate 22.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 77.14% |
| Values | Daily Returns |
STMicroelectronics NV vs. Public Storage
Performance |
| Timeline |
| STMicroelectronics |
| Public Storage |
STMicroelectronics and Public Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Public Storage
The main advantage of trading using opposite STMicroelectronics and Public Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Public Storage 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 Public Storage will offset losses from the drop in Public Storage's long position.| STMicroelectronics vs. JB Hunt Transport | STMicroelectronics vs. Brpr Corporate Offices | STMicroelectronics vs. Deutsche Bank Aktiengesellschaft | STMicroelectronics vs. Sumitomo Mitsui Financial |
| Public Storage vs. Mitsubishi UFJ Financial | Public Storage vs. Deutsche Bank Aktiengesellschaft | Public Storage vs. SVB Financial Group | Public Storage vs. HDFC Bank Limited |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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