Correlation Between STMicroelectronics and Caseys General

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

By analyzing existing cross correlation between STMicroelectronics NV and Caseys General Stores, you can compare the effects of market volatilities on STMicroelectronics and Caseys General 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 Caseys General. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Caseys General.

Diversification Opportunities for STMicroelectronics and Caseys General

0.76

Correlation Coefficient

STMicroelectronics  Caseys General

Poor diversification

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

Pair Corralation between STMicroelectronics and Caseys General

Assuming the 90 days horizon STMicroelectronics NV is expected to generate 1.24 times more return on investment than Caseys General. However, STMicroelectronics is 1.24 times more volatile than Caseys General Stores. It trades about 0.2 of its potential returns per unit of risk. Caseys General Stores is currently generating about 0.1 per unit of risk. If you would invest  2,034  in STMicroelectronics NV on April 24, 2025 and sell it today you would earn a total of  804.00  from holding STMicroelectronics NV or generate 39.53% return on investment over 90 days.

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

STMicroelectronics NV  vs.  Caseys General Stores

STMicroelectronics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in STMicroelectronics NV are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, STMicroelectronics reported solid returns over the last few months and may actually be approaching a breakup point.

Caseys General Stores

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Caseys General unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STMicroelectronics and Caseys General

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

The idea behind STMicroelectronics NV and Caseys General Stores 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.