Correlation Between Apple and NXP Semiconductors
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and NXP Semiconductors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and NXP Semiconductors NV, you can compare the effects of market volatilities on Apple 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 Apple with a short position of NXP Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and NXP Semiconductors.
Diversification Opportunities for Apple and NXP Semiconductors
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Apple and NXP is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and NXP Semiconductors NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXP Semiconductors and Apple 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 Apple Inc 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 Apple i.e., Apple and NXP Semiconductors go up and down completely randomly.
Pair Corralation between Apple and NXP Semiconductors
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.44 times more return on investment than NXP Semiconductors. However, Apple Inc is 2.25 times less risky than NXP Semiconductors. It trades about 0.13 of its potential returns per unit of risk. NXP Semiconductors NV is currently generating about -0.01 per unit of risk. If you would invest 21,579 in Apple Inc on August 28, 2024 and sell it today you would earn a total of 761.00 from holding Apple Inc or generate 3.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. NXP Semiconductors NV
Performance |
| Timeline |
| Apple Inc |
| NXP Semiconductors |
Apple and NXP Semiconductors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and NXP Semiconductors
The main advantage of trading using opposite Apple and NXP Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. Elmos Semiconductor SE | Apple vs. JAPAN TOBACCO UNSPADR12 | Apple vs. Samsung Electronics Co | Apple vs. BE Semiconductor Industries |
| NXP Semiconductors vs. Apple Inc | NXP Semiconductors vs. Apple Inc | NXP Semiconductors vs. Microsoft | NXP Semiconductors vs. Microsoft |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |