Correlation Between NXP Semiconductors and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both NXP Semiconductors and Addus HomeCare 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 Addus HomeCare 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 Addus HomeCare, you can compare the effects of market volatilities on NXP Semiconductors and Addus HomeCare 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 Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXP Semiconductors and Addus HomeCare.
Diversification Opportunities for NXP Semiconductors and Addus HomeCare
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NXP and Addus is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding NXP Semiconductors NV and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare 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 Addus HomeCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addus HomeCare has no effect on the direction of NXP Semiconductors i.e., NXP Semiconductors and Addus HomeCare go up and down completely randomly.
Pair Corralation between NXP Semiconductors and Addus HomeCare
Assuming the 90 days trading horizon NXP Semiconductors is expected to generate 2.08 times less return on investment than Addus HomeCare. But when comparing it to its historical volatility, NXP Semiconductors NV is 1.03 times less risky than Addus HomeCare. It trades about 0.03 of its potential returns per unit of risk. Addus HomeCare is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 8,350 in Addus HomeCare on September 4, 2024 and sell it today you would earn a total of 2,950 from holding Addus HomeCare or generate 35.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NXP Semiconductors NV vs. Addus HomeCare
Performance |
| Timeline |
| NXP Semiconductors |
| Addus HomeCare |
NXP Semiconductors and Addus HomeCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXP Semiconductors and Addus HomeCare
The main advantage of trading using opposite NXP Semiconductors and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXP Semiconductors position performs unexpectedly, Addus HomeCare 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 Addus HomeCare will offset losses from the drop in Addus HomeCare's long position.| NXP Semiconductors vs. TOTAL GABON | NXP Semiconductors vs. Walgreens Boots Alliance | NXP Semiconductors vs. Peak Resources Limited |
| Addus HomeCare vs. Superior Plus Corp | Addus HomeCare vs. NMI Holdings | Addus HomeCare vs. Origin Agritech | Addus HomeCare vs. SIVERS SEMICONDUCTORS AB |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |