Correlation Between NXP Semiconductors and Clean Energy
Can any of the company-specific risk be diversified away by investing in both NXP Semiconductors and Clean Energy 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 Clean Energy 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 Clean Energy Fuels, you can compare the effects of market volatilities on NXP Semiconductors and Clean Energy 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 Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXP Semiconductors and Clean Energy.
Diversification Opportunities for NXP Semiconductors and Clean Energy
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between NXP and Clean is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding NXP Semiconductors NV and Clean Energy Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Energy Fuels 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 Clean Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Energy Fuels has no effect on the direction of NXP Semiconductors i.e., NXP Semiconductors and Clean Energy go up and down completely randomly.
Pair Corralation between NXP Semiconductors and Clean Energy
Assuming the 90 days trading horizon NXP Semiconductors NV is expected to under-perform the Clean Energy. But the stock apears to be less risky and, when comparing its historical volatility, NXP Semiconductors NV is 2.08 times less risky than Clean Energy. The stock trades about -0.04 of its potential returns per unit of risk. The Clean Energy Fuels is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 276.00 in Clean Energy Fuels on August 31, 2024 and sell it today you would earn a total of 18.00 from holding Clean Energy Fuels or generate 6.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
NXP Semiconductors NV vs. Clean Energy Fuels
Performance |
| Timeline |
| NXP Semiconductors |
| Clean Energy Fuels |
NXP Semiconductors and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXP Semiconductors and Clean Energy
The main advantage of trading using opposite NXP Semiconductors and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXP Semiconductors position performs unexpectedly, Clean Energy 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 Clean Energy will offset losses from the drop in Clean Energy's long position.| NXP Semiconductors vs. SIVERS SEMICONDUCTORS AB | NXP Semiconductors vs. Darden Restaurants | NXP Semiconductors vs. Reliance Steel Aluminum | NXP Semiconductors vs. Q2M Managementberatung AG |
| Clean Energy vs. STORE ELECTRONIC | Clean Energy vs. Astral Foods Limited | Clean Energy vs. AUSNUTRIA DAIRY | Clean Energy vs. JJ SNACK FOODS |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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