Correlation Between STMicroelectronics and Realogy Holdings

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

Diversification Opportunities for STMicroelectronics and Realogy Holdings

0.0

Correlation Coefficient

STMicroelectronics  Realogy Holdings

Pay attention - limited upside

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

Pair Corralation between STMicroelectronics and Realogy Holdings

If you would invest  1,215  in Realogy Holdings Corp on February 5, 2024 and sell it today you would earn a total of  0.00  from holding Realogy Holdings Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	2.33%
Values	Daily Returns

STMicroelectronics NV ADR  vs.  Realogy Holdings Corp

STMicroelectronics NV ADR

Risk-Adjusted Performance

0 of 100

Very Weak

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 inconsistent 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.

Realogy Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with STMicroelectronics and Realogy Holdings

The main advantage of trading using opposite STMicroelectronics and Realogy Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Realogy Holdings 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 Realogy Holdings will offset losses from the drop in Realogy Holdings' long position.

The idea behind STMicroelectronics NV ADR and Realogy Holdings Corp 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 CEOs Directory module to screen CEOs from public companies around the world.