Correlation Between Infineon Technologies and NXP Semiconductors
Can any of the company-specific risk be diversified away by investing in both Infineon Technologies 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 Infineon Technologies and NXP Semiconductors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Infineon Technologies AG and NXP Semiconductors NV, you can compare the effects of market volatilities on Infineon Technologies 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 Infineon Technologies with a short position of NXP Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infineon Technologies and NXP Semiconductors.
Diversification Opportunities for Infineon Technologies and NXP Semiconductors
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Infineon and NXP is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Infineon Technologies AG and NXP Semiconductors NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXP Semiconductors and Infineon Technologies 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 Infineon Technologies AG 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 Infineon Technologies i.e., Infineon Technologies and NXP Semiconductors go up and down completely randomly.
Pair Corralation between Infineon Technologies and NXP Semiconductors
Assuming the 90 days horizon Infineon Technologies AG is expected to generate 1.09 times more return on investment than NXP Semiconductors. However, Infineon Technologies is 1.09 times more volatile than NXP Semiconductors NV. It trades about -0.02 of its potential returns per unit of risk. NXP Semiconductors NV is currently generating about -0.15 per unit of risk. If you would invest 3,320 in Infineon Technologies AG on August 29, 2024 and sell it today you would lose (65.00) from holding Infineon Technologies AG or give up 1.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Infineon Technologies AG vs. NXP Semiconductors NV
Performance |
| Timeline |
| Infineon Technologies |
| NXP Semiconductors |
Infineon Technologies and NXP Semiconductors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infineon Technologies and NXP Semiconductors
The main advantage of trading using opposite Infineon Technologies and NXP Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infineon Technologies 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.| Infineon Technologies vs. NVIDIA | Infineon Technologies vs. Intel | Infineon Technologies vs. Taiwan Semiconductor Manufacturing | Infineon Technologies vs. Marvell Technology Group |
| NXP Semiconductors vs. Analog Devices | NXP Semiconductors vs. Qualcomm Incorporated | NXP Semiconductors vs. Broadcom | NXP Semiconductors vs. Microchip 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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