Correlation Between NXP Semiconductors and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both NXP Semiconductors and UnitedHealth Group 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 UnitedHealth Group 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 UnitedHealth Group Incorporated, you can compare the effects of market volatilities on NXP Semiconductors and UnitedHealth Group 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 UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXP Semiconductors and UnitedHealth Group.
Diversification Opportunities for NXP Semiconductors and UnitedHealth Group
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NXP and UnitedHealth is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding NXP Semiconductors NV and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group 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 UnitedHealth Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UnitedHealth Group has no effect on the direction of NXP Semiconductors i.e., NXP Semiconductors and UnitedHealth Group go up and down completely randomly.
Pair Corralation between NXP Semiconductors and UnitedHealth Group
Assuming the 90 days trading horizon NXP Semiconductors NV is expected to generate 0.73 times more return on investment than UnitedHealth Group. However, NXP Semiconductors NV is 1.37 times less risky than UnitedHealth Group. It trades about 0.0 of its potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about -0.03 per unit of risk. If you would invest 65,934 in NXP Semiconductors NV on October 12, 2024 and sell it today you would lose (284.00) from holding NXP Semiconductors NV or give up 0.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NXP Semiconductors NV vs. UnitedHealth Group Incorporate
Performance |
| Timeline |
| NXP Semiconductors |
| UnitedHealth Group |
NXP Semiconductors and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXP Semiconductors and UnitedHealth Group
The main advantage of trading using opposite NXP Semiconductors and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXP Semiconductors position performs unexpectedly, UnitedHealth Group 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 UnitedHealth Group will offset losses from the drop in UnitedHealth Group's long position.| NXP Semiconductors vs. Fresenius Medical Care | NXP Semiconductors vs. salesforce inc | NXP Semiconductors vs. Air Products and | NXP Semiconductors vs. Tyson Foods |
| UnitedHealth Group vs. NXP Semiconductors NV | UnitedHealth Group vs. Guidewire Software, | UnitedHealth Group vs. Hormel Foods | UnitedHealth Group vs. Deutsche Bank Aktiengesellschaft |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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