Correlation Between STMicroelectronics and Glacier Bancorp

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

Diversification Opportunities for STMicroelectronics and Glacier Bancorp

-0.82

Correlation Coefficient

STMicroelectronics  Glacier Bancorp

Pay attention - limited upside

The 3 months correlation between STMicroelectronics and Glacier is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV ADR and Glacier Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glacier Bancorp 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 Glacier Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glacier Bancorp has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Glacier Bancorp go up and down completely randomly.

Pair Corralation between STMicroelectronics and Glacier Bancorp

Considering the 90-day investment horizon STMicroelectronics NV ADR is expected to generate 1.37 times more return on investment than Glacier Bancorp. However, STMicroelectronics is 1.37 times more volatile than Glacier Bancorp. It trades about 0.1 of its potential returns per unit of risk. Glacier Bancorp is currently generating about -0.13 per unit of risk. If you would invest  2,495  in STMicroelectronics NV ADR on September 17, 2024 and sell it today you would earn a total of  75.00  from holding STMicroelectronics NV ADR or generate 3.01% return on investment over 90 days.

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

STMicroelectronics NV ADR  vs.  Glacier Bancorp

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 uncertain 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.

Glacier Bancorp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Glacier Bancorp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental indicators, Glacier Bancorp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STMicroelectronics and Glacier Bancorp

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

The idea behind STMicroelectronics NV ADR and Glacier Bancorp 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.