Correlation Between Equinor ASA and NXP Semiconductors
Can any of the company-specific risk be diversified away by investing in both Equinor ASA 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 Equinor ASA and NXP Semiconductors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinor ASA and NXP Semiconductors NV, you can compare the effects of market volatilities on Equinor ASA 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 Equinor ASA with a short position of NXP Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and NXP Semiconductors.
Diversification Opportunities for Equinor ASA and NXP Semiconductors
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Equinor and NXP is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA and NXP Semiconductors NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXP Semiconductors and Equinor ASA 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 Equinor ASA 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 Equinor ASA i.e., Equinor ASA and NXP Semiconductors go up and down completely randomly.
Pair Corralation between Equinor ASA and NXP Semiconductors
Assuming the 90 days horizon Equinor ASA is expected to generate 0.85 times more return on investment than NXP Semiconductors. However, Equinor ASA is 1.18 times less risky than NXP Semiconductors. It trades about -0.02 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 2,330 in Equinor ASA on December 7, 2024 and sell it today you would lose (242.00) from holding Equinor ASA or give up 10.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinor ASA vs. NXP Semiconductors NV
Performance |
| Timeline |
| Equinor ASA |
| NXP Semiconductors |
Equinor ASA and NXP Semiconductors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinor ASA and NXP Semiconductors
The main advantage of trading using opposite Equinor ASA and NXP Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA 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.| Equinor ASA vs. Daito Trust Construction | Equinor ASA vs. GAMING FAC SA | Equinor ASA vs. CONTAGIOUS GAMING INC | Equinor ASA vs. FUTURE GAMING GRP |
| NXP Semiconductors vs. Perseus Mining Limited | NXP Semiconductors vs. Television Broadcasts Limited | NXP Semiconductors vs. ADRIATIC METALS LS 013355 | NXP Semiconductors vs. Calibre Mining Corp |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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