Correlation Between Stmicroelectronics and Badger DAO

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

Diversification Opportunities for Stmicroelectronics and Badger DAO

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Stmicroelectronics and Badger is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Stmicroelectronics NV ADR and Badger DAO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Badger DAO 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 Badger DAO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Badger DAO has no effect on the direction of Stmicroelectronics i.e., Stmicroelectronics and Badger DAO go up and down completely randomly.

Pair Corralation between Stmicroelectronics and Badger DAO

Considering the 90-day investment horizon Stmicroelectronics NV ADR is expected to generate 0.33 times more return on investment than Badger DAO. However, Stmicroelectronics NV ADR is 2.99 times less risky than Badger DAO. It trades about 0.01 of its potential returns per unit of risk. Badger DAO is currently generating about -0.06 per unit of risk. If you would invest  3,231  in Stmicroelectronics NV ADR on June 28, 2022 and sell it today you would earn a total of  54.00  from holding Stmicroelectronics NV ADR or generate 1.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy47.48%
ValuesDaily Returns

Stmicroelectronics NV ADR  vs.  Badger DAO

 Performance (%) 
       Timeline  
Stmicroelectronics NV ADR 
Stmicroelectronics Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Stmicroelectronics NV ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, Stmicroelectronics is not utilizing all of its potentials. The newest stock price chaos, may contribute to medium-term losses for the stakeholders.

Stmicroelectronics Price Channel

Badger DAO 
Badger Performance
0 of 100
Over the last 90 days Badger DAO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak technical and fundamental indicators, Badger DAO sustained solid returns over the last few months and may actually be approaching a breakup point.

Stmicroelectronics and Badger DAO Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Stmicroelectronics and Badger DAO

The main advantage of trading using opposite Stmicroelectronics and Badger DAO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stmicroelectronics position performs unexpectedly, Badger DAO 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 Badger DAO will offset losses from the drop in Badger DAO's long position.
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The idea behind Stmicroelectronics NV ADR and Badger DAO 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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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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