Correlation Between NXP Semiconductors and United Rentals
Can any of the company-specific risk be diversified away by investing in both NXP Semiconductors and United Rentals 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 United Rentals 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 United Rentals, you can compare the effects of market volatilities on NXP Semiconductors and United Rentals 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 United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXP Semiconductors and United Rentals.
Diversification Opportunities for NXP Semiconductors and United Rentals
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between NXP and United is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding NXP Semiconductors NV and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals 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 United Rentals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Rentals has no effect on the direction of NXP Semiconductors i.e., NXP Semiconductors and United Rentals go up and down completely randomly.
Pair Corralation between NXP Semiconductors and United Rentals
Assuming the 90 days trading horizon NXP Semiconductors NV is expected to under-perform the United Rentals. But the stock apears to be less risky and, when comparing its historical volatility, NXP Semiconductors NV is 1.28 times less risky than United Rentals. The stock trades about -0.13 of its potential returns per unit of risk. The United Rentals is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 16,724 in United Rentals on August 30, 2024 and sell it today you would earn a total of 1,468 from holding United Rentals or generate 8.78% 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. United Rentals
Performance |
| Timeline |
| NXP Semiconductors |
| United Rentals |
NXP Semiconductors and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXP Semiconductors and United Rentals
The main advantage of trading using opposite NXP Semiconductors and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXP Semiconductors position performs unexpectedly, United Rentals 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 United Rentals will offset losses from the drop in United Rentals' long position.| NXP Semiconductors vs. Intel | NXP Semiconductors vs. Micron Technology | NXP Semiconductors vs. STMicroelectronics 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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |