Correlation Between Equinix and NXP Semiconductors
Can any of the company-specific risk be diversified away by investing in both Equinix 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 Equinix and NXP Semiconductors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and NXP Semiconductors NV, you can compare the effects of market volatilities on Equinix 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 Equinix with a short position of NXP Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and NXP Semiconductors.
Diversification Opportunities for Equinix and NXP Semiconductors
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Equinix and NXP is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and NXP Semiconductors NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXP Semiconductors and Equinix 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 Equinix 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 Equinix i.e., Equinix and NXP Semiconductors go up and down completely randomly.
Pair Corralation between Equinix and NXP Semiconductors
Assuming the 90 days trading horizon Equinix is expected to generate 0.97 times more return on investment than NXP Semiconductors. However, Equinix is 1.03 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 -0.03 per unit of risk. If you would invest 6,559 in Equinix on September 12, 2024 and sell it today you would earn a total of 679.00 from holding Equinix or generate 10.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Equinix vs. NXP Semiconductors NV
Performance |
| Timeline |
| Equinix |
| NXP Semiconductors |
Equinix and NXP Semiconductors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinix and NXP Semiconductors
The main advantage of trading using opposite Equinix and NXP Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix 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.| Equinix vs. NXP Semiconductors NV | Equinix vs. Nordon Indstrias Metalrgicas | Equinix vs. Dell Technologies | Equinix vs. Spotify Technology SA |
| NXP Semiconductors vs. Taiwan Semiconductor Manufacturing | NXP Semiconductors vs. Broadcom | NXP Semiconductors vs. Advanced Micro Devices | NXP Semiconductors vs. Micron Technology |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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