Correlation Between STMicroelectronics and Uber Technologies
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Uber Technologies 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 Uber Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Uber Technologies, you can compare the effects of market volatilities on STMicroelectronics and Uber Technologies 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 Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Uber Technologies.
Diversification Opportunities for STMicroelectronics and Uber Technologies
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between STMicroelectronics and Uber is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Uber Technologies go up and down completely randomly.
Pair Corralation between STMicroelectronics and Uber Technologies
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the Uber Technologies. In addition to that, STMicroelectronics is 1.9 times more volatile than Uber Technologies. It trades about -0.19 of its total potential returns per unit of risk. Uber Technologies is currently generating about -0.07 per unit of volatility. If you would invest 10,176 in Uber Technologies on November 6, 2024 and sell it today you would lose (286.00) from holding Uber Technologies or give up 2.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Uber Technologies
Performance |
| Timeline |
| STMicroelectronics |
| Uber Technologies |
STMicroelectronics and Uber Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Uber Technologies
The main advantage of trading using opposite STMicroelectronics and Uber Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Uber Technologies 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 Uber Technologies will offset losses from the drop in Uber Technologies' long position.| STMicroelectronics vs. Taiwan Semiconductor Manufacturing | STMicroelectronics vs. NVIDIA | STMicroelectronics vs. Broadcom | STMicroelectronics vs. Texas Instruments Incorporated |
| Uber Technologies vs. ServiceNow | Uber Technologies vs. Snowflake | Uber Technologies vs. Datadog, | Uber Technologies vs. Autodesk |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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