Correlation Between Schroders Investment and STMicroelectronics

Can any of the company-specific risk be diversified away by investing in both Schroders Investment 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 Schroders Investment and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Schroders Investment Trusts and STMicroelectronics NV, you can compare the effects of market volatilities on Schroders Investment 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 Schroders Investment with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schroders Investment and STMicroelectronics.

Diversification Opportunities for Schroders Investment and STMicroelectronics

0.84

Correlation Coefficient

Schroders Investment  STMicroelectronics

Very poor diversification

The 3 months correlation between Schroders and STMicroelectronics is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Schroders Investment Trusts and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Schroders Investment 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 Schroders Investment Trusts 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 Schroders Investment i.e., Schroders Investment and STMicroelectronics go up and down completely randomly.

Pair Corralation between Schroders Investment and STMicroelectronics

Assuming the 90 days trading horizon Schroders Investment Trusts is expected to generate 0.22 times more return on investment than STMicroelectronics. However, Schroders Investment Trusts is 4.49 times less risky than STMicroelectronics. It trades about 0.04 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about 0.0 per unit of risk. If you would invest  44,396  in Schroders Investment Trusts on April 21, 2025 and sell it today you would earn a total of  4,604  from holding Schroders Investment Trusts or generate 10.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Schroders Investment Trusts  vs.  STMicroelectronics NV

Schroders Investment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Schroders Investment Trusts are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Schroders Investment exhibited solid returns over the last few months and may actually be approaching a breakup point.

STMicroelectronics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in STMicroelectronics NV are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, STMicroelectronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Schroders Investment and STMicroelectronics

The main advantage of trading using opposite Schroders Investment and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schroders Investment 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' long position.

The idea behind Schroders Investment Trusts and STMicroelectronics NV 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.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.