Correlation Between NXP Semiconductors and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both NXP Semiconductors and Raytheon Technologies 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 Raytheon Technologies 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 Raytheon Technologies, you can compare the effects of market volatilities on NXP Semiconductors and Raytheon Technologies 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 Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXP Semiconductors and Raytheon Technologies.
Diversification Opportunities for NXP Semiconductors and Raytheon Technologies
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NXP and Raytheon is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding NXP Semiconductors NV and Raytheon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies 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 Raytheon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytheon Technologies has no effect on the direction of NXP Semiconductors i.e., NXP Semiconductors and Raytheon Technologies go up and down completely randomly.
Pair Corralation between NXP Semiconductors and Raytheon Technologies
Assuming the 90 days trading horizon NXP Semiconductors NV is expected to generate 1.54 times more return on investment than Raytheon Technologies. However, NXP Semiconductors is 1.54 times more volatile than Raytheon Technologies. It trades about 0.08 of its potential returns per unit of risk. Raytheon Technologies is currently generating about 0.07 per unit of risk. If you would invest 42,327 in NXP Semiconductors NV on September 19, 2024 and sell it today you would earn a total of 24,175 from holding NXP Semiconductors NV or generate 57.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 64.34% |
| Values | Daily Returns |
NXP Semiconductors NV vs. Raytheon Technologies
Performance |
| Timeline |
| NXP Semiconductors |
| Raytheon Technologies |
NXP Semiconductors and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXP Semiconductors and Raytheon Technologies
The main advantage of trading using opposite NXP Semiconductors and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXP Semiconductors position performs unexpectedly, Raytheon Technologies 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 Raytheon Technologies will offset losses from the drop in Raytheon Technologies' long position.| NXP Semiconductors vs. Multilaser Industrial SA | NXP Semiconductors vs. Nordon Indstrias Metalrgicas | NXP Semiconductors vs. Bemobi Mobile Tech | NXP Semiconductors vs. CM Hospitalar SA |
| Raytheon Technologies vs. Taurus Armas SA | Raytheon Technologies vs. Schulz SA | Raytheon Technologies vs. Petro Rio SA | Raytheon Technologies vs. Movida Participaes SA |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |