Correlation Between STMicroelectronics and Prudential Plc
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Prudential Plc 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 Prudential Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Prudential plc, you can compare the effects of market volatilities on STMicroelectronics and Prudential Plc 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 Prudential Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Prudential Plc.
Diversification Opportunities for STMicroelectronics and Prudential Plc
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between STMicroelectronics and Prudential is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Prudential plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential plc 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 Prudential Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential plc has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Prudential Plc go up and down completely randomly.
Pair Corralation between STMicroelectronics and Prudential Plc
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the Prudential Plc. But the stock apears to be less risky and, when comparing its historical volatility, STMicroelectronics NV is 1.32 times less risky than Prudential Plc. The stock trades about -0.01 of its potential returns per unit of risk. The Prudential plc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,516 in Prudential plc on September 13, 2024 and sell it today you would lose (122.00) from holding Prudential plc or give up 4.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.39% |
| Values | Daily Returns |
STMicroelectronics NV vs. Prudential plc
Performance |
| Timeline |
| STMicroelectronics |
| Prudential plc |
STMicroelectronics and Prudential Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Prudential Plc
The main advantage of trading using opposite STMicroelectronics and Prudential Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Prudential Plc 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 Prudential Plc will offset losses from the drop in Prudential Plc's long position.| STMicroelectronics vs. Multilaser Industrial SA | STMicroelectronics vs. Apartment Investment and | STMicroelectronics vs. Zoom Video Communications | STMicroelectronics vs. Nordon Indstrias Metalrgicas |
| Prudential Plc vs. STMicroelectronics NV | Prudential Plc vs. Uber Technologies | Prudential Plc vs. Unity Software | Prudential Plc vs. Agilent Technologies |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| 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 | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |