Correlation Between STMicroelectronics and Skyworks Solutions
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Skyworks Solutions 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 Skyworks Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Skyworks Solutions, you can compare the effects of market volatilities on STMicroelectronics and Skyworks Solutions 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 Skyworks Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Skyworks Solutions.
Diversification Opportunities for STMicroelectronics and Skyworks Solutions
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between STMicroelectronics and Skyworks is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Skyworks Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skyworks Solutions 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 Skyworks Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skyworks Solutions has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Skyworks Solutions go up and down completely randomly.
Pair Corralation between STMicroelectronics and Skyworks Solutions
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the Skyworks Solutions. In addition to that, STMicroelectronics is 1.67 times more volatile than Skyworks Solutions. It trades about -0.04 of its total potential returns per unit of risk. Skyworks Solutions is currently generating about -0.01 per unit of volatility. If you would invest 24,303 in Skyworks Solutions on February 3, 2025 and sell it today you would lose (6,303) from holding Skyworks Solutions or give up 25.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 42.68% |
| Values | Daily Returns |
STMicroelectronics NV vs. Skyworks Solutions
Performance |
| Timeline |
| STMicroelectronics |
| Skyworks Solutions |
STMicroelectronics and Skyworks Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Skyworks Solutions
The main advantage of trading using opposite STMicroelectronics and Skyworks Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Skyworks Solutions 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 Skyworks Solutions will offset losses from the drop in Skyworks Solutions' long position.| STMicroelectronics vs. Ares Management | STMicroelectronics vs. Molson Coors Beverage | STMicroelectronics vs. Zoom Video Communications | STMicroelectronics vs. Pentair plc |
| Skyworks Solutions vs. Tyson Foods | Skyworks Solutions vs. METISA Metalrgica Timboense | Skyworks Solutions vs. ON Semiconductor | Skyworks Solutions vs. United Natural Foods, |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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