Correlation Between STMicroelectronics and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Westinghouse Air 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 Westinghouse Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Westinghouse Air Brake, you can compare the effects of market volatilities on STMicroelectronics and Westinghouse Air 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 Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Westinghouse Air.
Diversification Opportunities for STMicroelectronics and Westinghouse Air
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STMicroelectronics and Westinghouse is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Westinghouse Air Brake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westinghouse Air Brake 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 Westinghouse Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westinghouse Air Brake has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Westinghouse Air go up and down completely randomly.
Pair Corralation between STMicroelectronics and Westinghouse Air
Assuming the 90 days trading horizon STMicroelectronics NV is expected to generate 1.02 times more return on investment than Westinghouse Air. However, STMicroelectronics is 1.02 times more volatile than Westinghouse Air Brake. It trades about -0.26 of its potential returns per unit of risk. Westinghouse Air Brake is currently generating about -0.3 per unit of risk. If you would invest 15,968 in STMicroelectronics NV on October 11, 2024 and sell it today you would lose (950.00) from holding STMicroelectronics NV or give up 5.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
STMicroelectronics NV vs. Westinghouse Air Brake
Performance |
| Timeline |
| STMicroelectronics |
| Westinghouse Air Brake |
STMicroelectronics and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Westinghouse Air
The main advantage of trading using opposite STMicroelectronics and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Westinghouse Air 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 Westinghouse Air will offset losses from the drop in Westinghouse Air's long position.| STMicroelectronics vs. Check Point Software | STMicroelectronics vs. salesforce inc | STMicroelectronics vs. United Airlines Holdings | STMicroelectronics vs. Spotify Technology SA |
| Westinghouse Air vs. STMicroelectronics NV | Westinghouse Air vs. DXC Technology | Westinghouse Air vs. Spotify Technology SA | Westinghouse Air vs. Take Two Interactive Software |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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