Correlation Between Entegris and STMicroelectronics

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

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

Diversification Opportunities for Entegris and STMicroelectronics

0.62

Correlation Coefficient

Entegris  STMicroelectronics

Poor diversification

The 3 months correlation between Entegris and STMicroelectronics is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Entegris and STMicroelectronics NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics NV ADR and Entegris 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 Entegris 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 NV ADR has no effect on the direction of Entegris i.e., Entegris and STMicroelectronics go up and down completely randomly.

Pair Corralation between Entegris and STMicroelectronics

Given the investment horizon of 90 days Entegris is expected to under-perform the STMicroelectronics. In addition to that, Entegris is 1.03 times more volatile than STMicroelectronics NV ADR. It trades about -0.05 of its total potential returns per unit of risk. STMicroelectronics NV ADR is currently generating about 0.0 per unit of volatility. If you would invest  2,605  in STMicroelectronics NV ADR on May 13, 2025 and sell it today you would lose (88.00) from holding STMicroelectronics NV ADR or give up 3.38% of portfolio value over 90 days.

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

Entegris  vs.  STMicroelectronics NV ADR

Entegris

Risk-Adjusted Performance

Weakest

Over the last 90 days Entegris has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

STMicroelectronics NV ADR

Risk-Adjusted Performance

Weakest

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 very healthy basic indicators, STMicroelectronics is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Entegris and STMicroelectronics

The main advantage of trading using opposite Entegris and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entegris 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 Entegris and STMicroelectronics NV ADR 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.