Correlation Between NXP Semiconductors and Sitime
Can any of the company-specific risk be diversified away by investing in both NXP Semiconductors and Sitime 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 Sitime 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 Sitime, you can compare the effects of market volatilities on NXP Semiconductors and Sitime 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 Sitime. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXP Semiconductors and Sitime.
Diversification Opportunities for NXP Semiconductors and Sitime
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NXP and Sitime is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding NXP Semiconductors NV and Sitime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitime 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 Sitime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitime has no effect on the direction of NXP Semiconductors i.e., NXP Semiconductors and Sitime go up and down completely randomly.
Pair Corralation between NXP Semiconductors and Sitime
Given the investment horizon of 90 days NXP Semiconductors NV is expected to generate 0.23 times more return on investment than Sitime. However, NXP Semiconductors NV is 4.28 times less risky than Sitime. It trades about 0.1 of its potential returns per unit of risk. Sitime is currently generating about -0.13 per unit of risk. If you would invest 20,972 in NXP Semiconductors NV on November 9, 2024 and sell it today you would earn a total of 710.00 from holding NXP Semiconductors NV or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NXP Semiconductors NV vs. Sitime
Performance |
| Timeline |
| NXP Semiconductors |
| Sitime |
NXP Semiconductors and Sitime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXP Semiconductors and Sitime
The main advantage of trading using opposite NXP Semiconductors and Sitime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXP Semiconductors position performs unexpectedly, Sitime 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 Sitime will offset losses from the drop in Sitime's long position.| NXP Semiconductors vs. Analog Devices | NXP Semiconductors vs. Qualcomm Incorporated | NXP Semiconductors vs. Broadcom | NXP Semiconductors vs. Microchip Technology |
| Sitime vs. Lattice Semiconductor | Sitime vs. Qorvo Inc | Sitime vs. Microchip Technology | Sitime vs. Silicon Laboratories |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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