Correlation Between NXP Semiconductors and United Insurance
Can any of the company-specific risk be diversified away by investing in both NXP Semiconductors and United Insurance 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 Insurance 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 Insurance Holdings, you can compare the effects of market volatilities on NXP Semiconductors and United Insurance 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 Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXP Semiconductors and United Insurance.
Diversification Opportunities for NXP Semiconductors and United Insurance
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NXP and United is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding NXP Semiconductors NV and United Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Insurance Holdings 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 Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Insurance Holdings has no effect on the direction of NXP Semiconductors i.e., NXP Semiconductors and United Insurance go up and down completely randomly.
Pair Corralation between NXP Semiconductors and United Insurance
Assuming the 90 days trading horizon NXP Semiconductors NV is expected to under-perform the United Insurance. But the stock apears to be less risky and, when comparing its historical volatility, NXP Semiconductors NV is 1.92 times less risky than United Insurance. The stock trades about -0.04 of its potential returns per unit of risk. The United Insurance Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 946.00 in United Insurance Holdings on October 17, 2024 and sell it today you would earn a total of 204.00 from holding United Insurance Holdings or generate 21.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NXP Semiconductors NV vs. United Insurance Holdings
Performance |
| Timeline |
| NXP Semiconductors |
| United Insurance Holdings |
NXP Semiconductors and United Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXP Semiconductors and United Insurance
The main advantage of trading using opposite NXP Semiconductors and United Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXP Semiconductors position performs unexpectedly, United Insurance 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 Insurance will offset losses from the drop in United Insurance's long position.| NXP Semiconductors vs. Axway Software SA | NXP Semiconductors vs. AXWAY SOFTWARE EO | NXP Semiconductors vs. China Communications Services | NXP Semiconductors vs. PSI Software AG |
| United Insurance vs. PLANT VEDA FOODS | United Insurance vs. Tyson Foods | United Insurance vs. MagnaChip Semiconductor Corp | United Insurance vs. NXP Semiconductors 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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