Correlation Between Agilent Technologies and NXP Semiconductors
Can any of the company-specific risk be diversified away by investing in both Agilent Technologies and NXP Semiconductors 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 Agilent Technologies and NXP Semiconductors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agilent Technologies and NXP Semiconductors NV, you can compare the effects of market volatilities on Agilent Technologies and NXP Semiconductors 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 Agilent Technologies with a short position of NXP Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agilent Technologies and NXP Semiconductors.
Diversification Opportunities for Agilent Technologies and NXP Semiconductors
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Agilent and NXP is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and NXP Semiconductors NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXP Semiconductors and Agilent Technologies 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 Agilent Technologies are associated (or correlated) with NXP Semiconductors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXP Semiconductors has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and NXP Semiconductors go up and down completely randomly.
Pair Corralation between Agilent Technologies and NXP Semiconductors
Assuming the 90 days trading horizon Agilent Technologies is expected to generate 2.36 times less return on investment than NXP Semiconductors. But when comparing it to its historical volatility, Agilent Technologies is 2.96 times less risky than NXP Semiconductors. It trades about 0.19 of its potential returns per unit of risk. NXP Semiconductors NV is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 63,313 in NXP Semiconductors NV on September 20, 2024 and sell it today you would earn a total of 4,658 from holding NXP Semiconductors NV or generate 7.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Agilent Technologies vs. NXP Semiconductors NV
Performance |
| Timeline |
| Agilent Technologies |
| NXP Semiconductors |
Agilent Technologies and NXP Semiconductors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agilent Technologies and NXP Semiconductors
The main advantage of trading using opposite Agilent Technologies and NXP Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, NXP Semiconductors 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 NXP Semiconductors will offset losses from the drop in NXP Semiconductors' long position.| Agilent Technologies vs. DexCom Inc | Agilent Technologies vs. Fundo Investimento Imobiliario | Agilent Technologies vs. LESTE FDO INV | Agilent Technologies vs. Fras le SA |
| NXP Semiconductors vs. Taiwan Semiconductor Manufacturing | NXP Semiconductors vs. STMicroelectronics NV |
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.
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