Correlation Between NXP Semiconductors and Cigna
Can any of the company-specific risk be diversified away by investing in both NXP Semiconductors and Cigna 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 Cigna 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 Cigna, you can compare the effects of market volatilities on NXP Semiconductors and Cigna 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 Cigna. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXP Semiconductors and Cigna.
Diversification Opportunities for NXP Semiconductors and Cigna
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between NXP and Cigna is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding NXP Semiconductors NV and Cigna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigna 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 Cigna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cigna has no effect on the direction of NXP Semiconductors i.e., NXP Semiconductors and Cigna go up and down completely randomly.
Pair Corralation between NXP Semiconductors and Cigna
Assuming the 90 days trading horizon NXP Semiconductors is expected to generate 1.31 times less return on investment than Cigna. In addition to that, NXP Semiconductors is 1.35 times more volatile than Cigna. It trades about 0.08 of its total potential returns per unit of risk. Cigna is currently generating about 0.14 per unit of volatility. If you would invest 31,276 in Cigna on September 2, 2024 and sell it today you would earn a total of 19,112 from holding Cigna or generate 61.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 88.5% |
| Values | Daily Returns |
NXP Semiconductors NV vs. Cigna
Performance |
| Timeline |
| NXP Semiconductors |
| Cigna |
NXP Semiconductors and Cigna Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXP Semiconductors and Cigna
The main advantage of trading using opposite NXP Semiconductors and Cigna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXP Semiconductors position performs unexpectedly, Cigna 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 Cigna will offset losses from the drop in Cigna's long position.| NXP Semiconductors vs. GP Investments | NXP Semiconductors vs. Tyson Foods | NXP Semiconductors vs. Marfrig Global Foods | NXP Semiconductors vs. Prudential Financial |
| Cigna vs. Spotify Technology SA | Cigna vs. Extra Space Storage | Cigna vs. Broadcom | Cigna vs. Bemobi Mobile Tech |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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