Correlation Between STMicroelectronics and Waste Management
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Waste Management 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 Waste Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Waste Management, you can compare the effects of market volatilities on STMicroelectronics and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Waste Management.
Diversification Opportunities for STMicroelectronics and Waste Management
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STMicroelectronics and Waste is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Waste Management go up and down completely randomly.
Pair Corralation between STMicroelectronics and Waste Management
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the Waste Management. But the stock apears to be less risky and, when comparing its historical volatility, STMicroelectronics NV is 1.22 times less risky than Waste Management. The stock trades about -0.4 of its potential returns per unit of risk. The Waste Management is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 59,295 in Waste Management on August 26, 2024 and sell it today you would earn a total of 5,668 from holding Waste Management or generate 9.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Waste Management
Performance |
| Timeline |
| STMicroelectronics |
| Waste Management |
STMicroelectronics and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Waste Management
The main advantage of trading using opposite STMicroelectronics and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| STMicroelectronics vs. Broadcom | STMicroelectronics vs. Paycom Software | STMicroelectronics vs. Monster Beverage | STMicroelectronics vs. Ross Stores |
| Waste Management vs. Bemobi Mobile Tech | Waste Management vs. UnitedHealth Group Incorporated | Waste Management vs. United Rentals | Waste Management vs. Metalurgica Gerdau SA |
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.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |