Correlation Between STMicroelectronics and Xilinx

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Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Xilinx 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 Xilinx 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 Xilinx Inc, you can compare the effects of market volatilities on STMicroelectronics and Xilinx 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 Xilinx. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Xilinx.

Diversification Opportunities for STMicroelectronics and Xilinx

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between STMicroelectronics and Xilinx is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV ADR and Xilinx Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xilinx Inc 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 Xilinx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xilinx Inc has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Xilinx go up and down completely randomly.

Pair Corralation between STMicroelectronics and Xilinx

If you would invest  3,448  in STMicroelectronics NV ADR on December 29, 2023 and sell it today you would earn a total of  949.00  from holding STMicroelectronics NV ADR or generate 27.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

STMicroelectronics NV ADR  vs.  Xilinx Inc

 Performance 
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STMicroelectronics NV ADR 

Risk-Adjusted Performance

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Over the last 90 days STMicroelectronics NV ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
Xilinx Inc 

Risk-Adjusted Performance

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Over the last 90 days Xilinx Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Xilinx is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

STMicroelectronics and Xilinx Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with STMicroelectronics and Xilinx

The main advantage of trading using opposite STMicroelectronics and Xilinx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Xilinx 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 Xilinx will offset losses from the drop in Xilinx's long position.
The idea behind STMicroelectronics NV ADR and Xilinx Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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