Correlation Between NXP Semiconductors and Amazon
Can any of the company-specific risk be diversified away by investing in both NXP Semiconductors and Amazon 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 NXP Semiconductors and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NXP Semiconductors NV and Amazon Inc, you can compare the effects of market volatilities on NXP Semiconductors and Amazon 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 NXP Semiconductors with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXP Semiconductors and Amazon.
Diversification Opportunities for NXP Semiconductors and Amazon
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between NXP and Amazon is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding NXP Semiconductors NV and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and NXP Semiconductors 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 NXP Semiconductors NV are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of NXP Semiconductors i.e., NXP Semiconductors and Amazon go up and down completely randomly.
Pair Corralation between NXP Semiconductors and Amazon
Assuming the 90 days trading horizon NXP Semiconductors NV is expected to generate 1.7 times more return on investment than Amazon. However, NXP Semiconductors is 1.7 times more volatile than Amazon Inc. It trades about -0.04 of its potential returns per unit of risk. Amazon Inc is currently generating about -0.18 per unit of risk. If you would invest 65,408 in NXP Semiconductors NV on November 18, 2024 and sell it today you would lose (1,230) from holding NXP Semiconductors NV or give up 1.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NXP Semiconductors NV vs. Amazon Inc
Performance |
| Timeline |
| NXP Semiconductors |
| Amazon Inc |
NXP Semiconductors and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXP Semiconductors and Amazon
The main advantage of trading using opposite NXP Semiconductors and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXP Semiconductors position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| NXP Semiconductors vs. Truist Financial | NXP Semiconductors vs. DXC Technology | NXP Semiconductors vs. The Hartford Financial | NXP Semiconductors vs. Capital One Financial |
| Amazon vs. Paycom Software | Amazon vs. Spotify Technology SA | Amazon vs. PENN Entertainment, | Amazon vs. Take Two Interactive Software |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |