Correlation Between Baumer SA and NXP Semiconductors
Can any of the company-specific risk be diversified away by investing in both Baumer SA 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 Baumer SA and NXP Semiconductors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baumer SA and NXP Semiconductors NV, you can compare the effects of market volatilities on Baumer SA 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 Baumer SA with a short position of NXP Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baumer SA and NXP Semiconductors.
Diversification Opportunities for Baumer SA and NXP Semiconductors
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Baumer and NXP is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Baumer SA and NXP Semiconductors NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXP Semiconductors and Baumer SA 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 Baumer SA 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 Baumer SA i.e., Baumer SA and NXP Semiconductors go up and down completely randomly.
Pair Corralation between Baumer SA and NXP Semiconductors
Assuming the 90 days trading horizon Baumer SA is expected to generate 1.36 times more return on investment than NXP Semiconductors. However, Baumer SA is 1.36 times more volatile than NXP Semiconductors NV. It trades about 0.05 of its potential returns per unit of risk. NXP Semiconductors NV is currently generating about 0.06 per unit of risk. If you would invest 1,100 in Baumer SA on October 24, 2024 and sell it today you would earn a total of 300.00 from holding Baumer SA or generate 27.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.78% |
| Values | Daily Returns |
Baumer SA vs. NXP Semiconductors NV
Performance |
| Timeline |
| Baumer SA |
| NXP Semiconductors |
Baumer SA and NXP Semiconductors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baumer SA and NXP Semiconductors
The main advantage of trading using opposite Baumer SA and NXP Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baumer SA 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.| Baumer SA vs. NXP Semiconductors NV | Baumer SA vs. Prudential Financial | Baumer SA vs. Molson Coors Beverage | Baumer SA vs. Discover Financial Services |
| NXP Semiconductors vs. Public Storage | NXP Semiconductors vs. Annaly Capital Management, | NXP Semiconductors vs. Bank of America | NXP Semiconductors vs. LPL Financial Holdings |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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