Correlation Between Sequans Communications and NXP Semiconductors
Can any of the company-specific risk be diversified away by investing in both Sequans Communications and NXP Semiconductors 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 Sequans Communications and NXP Semiconductors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sequans Communications SA and NXP Semiconductors NV, you can compare the effects of market volatilities on Sequans Communications and NXP Semiconductors 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 Sequans Communications with a short position of NXP Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sequans Communications and NXP Semiconductors.
Diversification Opportunities for Sequans Communications and NXP Semiconductors
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sequans and NXP is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sequans Communications SA and NXP Semiconductors NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXP Semiconductors and Sequans Communications 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 Sequans Communications SA are associated (or correlated) with NXP Semiconductors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXP Semiconductors has no effect on the direction of Sequans Communications i.e., Sequans Communications and NXP Semiconductors go up and down completely randomly.
Pair Corralation between Sequans Communications and NXP Semiconductors
Given the investment horizon of 90 days Sequans Communications is expected to generate 1.01 times less return on investment than NXP Semiconductors. In addition to that, Sequans Communications is 3.63 times more volatile than NXP Semiconductors NV. It trades about 0.01 of its total potential returns per unit of risk. NXP Semiconductors NV is currently generating about 0.05 per unit of volatility. If you would invest 15,239 in NXP Semiconductors NV on September 12, 2024 and sell it today you would earn a total of 6,846 from holding NXP Semiconductors NV or generate 44.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sequans Communications SA vs. NXP Semiconductors NV
Performance |
| Timeline |
| Sequans Communications |
| NXP Semiconductors |
Sequans Communications and NXP Semiconductors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sequans Communications and NXP Semiconductors
The main advantage of trading using opposite Sequans Communications and NXP Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sequans Communications position performs unexpectedly, NXP Semiconductors 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 NXP Semiconductors will offset losses from the drop in NXP Semiconductors' long position.| Sequans Communications vs. QuickLogic | Sequans Communications vs. Power Integrations | Sequans Communications vs. Silicon Laboratories | Sequans Communications vs. FormFactor |
| NXP Semiconductors vs. Analog Devices | NXP Semiconductors vs. Qualcomm Incorporated | NXP Semiconductors vs. Broadcom | NXP Semiconductors vs. Microchip Technology |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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