Correlation Between CONAGRA FOODS and NXP Semiconductors
Can any of the company-specific risk be diversified away by investing in both CONAGRA FOODS 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 CONAGRA FOODS and NXP Semiconductors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CONAGRA FOODS and NXP Semiconductors NV, you can compare the effects of market volatilities on CONAGRA FOODS 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 CONAGRA FOODS with a short position of NXP Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of CONAGRA FOODS and NXP Semiconductors.
Diversification Opportunities for CONAGRA FOODS and NXP Semiconductors
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between CONAGRA and NXP is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding CONAGRA FOODS and NXP Semiconductors NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXP Semiconductors and CONAGRA FOODS 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 CONAGRA FOODS 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 CONAGRA FOODS i.e., CONAGRA FOODS and NXP Semiconductors go up and down completely randomly.
Pair Corralation between CONAGRA FOODS and NXP Semiconductors
Assuming the 90 days trading horizon CONAGRA FOODS is expected to generate 0.44 times more return on investment than NXP Semiconductors. However, CONAGRA FOODS is 2.25 times less risky than NXP Semiconductors. It trades about -0.06 of its potential returns per unit of risk. NXP Semiconductors NV is currently generating about -0.03 per unit of risk. If you would invest 2,681 in CONAGRA FOODS on August 25, 2024 and sell it today you would lose (50.00) from holding CONAGRA FOODS or give up 1.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CONAGRA FOODS vs. NXP Semiconductors NV
Performance |
| Timeline |
| CONAGRA FOODS |
| NXP Semiconductors |
CONAGRA FOODS and NXP Semiconductors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CONAGRA FOODS and NXP Semiconductors
The main advantage of trading using opposite CONAGRA FOODS and NXP Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CONAGRA FOODS 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.| CONAGRA FOODS vs. Apple Inc | CONAGRA FOODS vs. Apple Inc | CONAGRA FOODS vs. Apple Inc | CONAGRA FOODS vs. Apple Inc |
| NXP Semiconductors vs. ECHO INVESTMENT ZY | NXP Semiconductors vs. SEI INVESTMENTS | NXP Semiconductors vs. Columbia Sportswear | NXP Semiconductors vs. BII Railway Transportation |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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