Correlation Between Corporate Office and STMICROELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Corporate Office and STMICROELECTRONICS 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 Corporate Office and STMICROELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Office Properties and STMICROELECTRONICS, you can compare the effects of market volatilities on Corporate Office and STMICROELECTRONICS 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 Corporate Office with a short position of STMICROELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Office and STMICROELECTRONICS.
Diversification Opportunities for Corporate Office and STMICROELECTRONICS
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Corporate and STMICROELECTRONICS is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS and Corporate Office 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 Corporate Office Properties are associated (or correlated) with STMICROELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMICROELECTRONICS has no effect on the direction of Corporate Office i.e., Corporate Office and STMICROELECTRONICS go up and down completely randomly.
Pair Corralation between Corporate Office and STMICROELECTRONICS
Assuming the 90 days horizon Corporate Office Properties is expected to generate 0.75 times more return on investment than STMICROELECTRONICS. However, Corporate Office Properties is 1.34 times less risky than STMICROELECTRONICS. It trades about 0.12 of its potential returns per unit of risk. STMICROELECTRONICS is currently generating about 0.06 per unit of risk. If you would invest 2,960 in Corporate Office Properties on September 5, 2024 and sell it today you would earn a total of 120.00 from holding Corporate Office Properties or generate 4.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Corporate Office Properties vs. STMICROELECTRONICS
Performance |
| Timeline |
| Corporate Office Pro |
| STMICROELECTRONICS |
Corporate Office and STMICROELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Office and STMICROELECTRONICS
The main advantage of trading using opposite Corporate Office and STMICROELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Office position performs unexpectedly, STMICROELECTRONICS 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 STMICROELECTRONICS will offset losses from the drop in STMICROELECTRONICS's long position.| Corporate Office vs. Superior Plus Corp | Corporate Office vs. NMI Holdings | Corporate Office vs. Origin Agritech | Corporate Office vs. SIVERS SEMICONDUCTORS AB |
| STMICROELECTRONICS vs. TOTAL GABON | STMICROELECTRONICS vs. Walgreens Boots Alliance | STMICROELECTRONICS vs. Peak Resources Limited |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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