Correlation Between NXP Semiconductors and Capital One
Can any of the company-specific risk be diversified away by investing in both NXP Semiconductors and Capital One 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 Capital One 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 Capital One Financial, you can compare the effects of market volatilities on NXP Semiconductors and Capital One 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 Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXP Semiconductors and Capital One.
Diversification Opportunities for NXP Semiconductors and Capital One
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between NXP and Capital is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding NXP Semiconductors NV and Capital One Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital One Financial 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 Capital One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital One Financial has no effect on the direction of NXP Semiconductors i.e., NXP Semiconductors and Capital One go up and down completely randomly.
Pair Corralation between NXP Semiconductors and Capital One
Assuming the 90 days trading horizon NXP Semiconductors is expected to generate 12.22 times less return on investment than Capital One. But when comparing it to its historical volatility, NXP Semiconductors NV is 1.14 times less risky than Capital One. It trades about 0.04 of its potential returns per unit of risk. Capital One Financial is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 47,114 in Capital One Financial on September 2, 2024 and sell it today you would earn a total of 12,452 from holding Capital One Financial or generate 26.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NXP Semiconductors NV vs. Capital One Financial
Performance |
| Timeline |
| NXP Semiconductors |
| Capital One Financial |
NXP Semiconductors and Capital One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXP Semiconductors and Capital One
The main advantage of trading using opposite NXP Semiconductors and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXP Semiconductors position performs unexpectedly, Capital One 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 Capital One will offset losses from the drop in Capital One's long position.| NXP Semiconductors vs. GP Investments | NXP Semiconductors vs. Tyson Foods | NXP Semiconductors vs. Marfrig Global Foods | NXP Semiconductors vs. Prudential Financial |
| Capital One vs. Taiwan Semiconductor Manufacturing | Capital One vs. Metalurgica Gerdau SA | Capital One vs. Apartment Investment and | Capital One vs. NXP Semiconductors NV |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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