Correlation Between STMicroelectronics and Intel
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Intel 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 Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV ADR and Intel, you can compare the effects of market volatilities on STMicroelectronics and Intel 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 Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Intel.
Diversification Opportunities for STMicroelectronics and Intel
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STMicroelectronics and Intel is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV ADR and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 ADR are associated (or correlated) with Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Intel go up and down completely randomly.
Pair Corralation between STMicroelectronics and Intel
Considering the 90-day investment horizon STMicroelectronics NV ADR is expected to generate 0.63 times more return on investment than Intel. However, STMicroelectronics NV ADR is 1.59 times less risky than Intel. It trades about -0.3 of its potential returns per unit of risk. Intel is currently generating about -0.33 per unit of risk. If you would invest 4,433 in STMicroelectronics NV ADR on January 20, 2024 and sell it today you would lose (472.00) from holding STMicroelectronics NV ADR or give up 10.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
STMicroelectronics NV ADR vs. Intel
Performance |
| Timeline |
| STMicroelectronics NV ADR |
| Intel |
STMicroelectronics and Intel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Intel
The main advantage of trading using opposite STMicroelectronics and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Intel 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 Intel will offset losses from the drop in Intel's long position.| STMicroelectronics vs. NXP Semiconductors NV | STMicroelectronics vs. Analog Devices | STMicroelectronics vs. ON Semiconductor | STMicroelectronics vs. Lattice Semiconductor |
| Intel vs. NVIDIA | Intel vs. Taiwan Semiconductor Manufacturing | Intel vs. Marvell Technology Group | Intel vs. Micron Technology |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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