Correlation Between Grupo Carso and NXP Semiconductors

Can any of the company-specific risk be diversified away by investing in both Grupo Carso 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 Grupo Carso and NXP Semiconductors into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grupo Carso SAB and NXP Semiconductors NV, you can compare the effects of market volatilities on Grupo Carso 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 Grupo Carso with a short position of NXP Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Carso and NXP Semiconductors.

Diversification Opportunities for Grupo Carso and NXP Semiconductors

0.69

Correlation Coefficient

Grupo Carso  NXP Semiconductors

Poor diversification

The 3 months correlation between Grupo and NXP is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB and NXP Semiconductors NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXP Semiconductors and Grupo Carso 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 Grupo Carso SAB 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 Grupo Carso i.e., Grupo Carso and NXP Semiconductors go up and down completely randomly.

Pair Corralation between Grupo Carso and NXP Semiconductors

Assuming the 90 days horizon Grupo Carso SAB is expected to generate 0.89 times more return on investment than NXP Semiconductors. However, Grupo Carso SAB is 1.12 times less risky than NXP Semiconductors. It trades about 0.02 of its potential returns per unit of risk. NXP Semiconductors NV is currently generating about -0.02 per unit of risk. If you would invest  530.00  in Grupo Carso SAB on December 20, 2024 and sell it today you would earn a total of  5.00  from holding Grupo Carso SAB or generate 0.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Grupo Carso SAB  vs.  NXP Semiconductors NV

Grupo Carso SAB

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Carso SAB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Grupo Carso is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

NXP Semiconductors

Risk-Adjusted Performance

Very Weak

Over the last 90 days NXP Semiconductors NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, NXP Semiconductors is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Grupo Carso and NXP Semiconductors

The main advantage of trading using opposite Grupo Carso and NXP Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Carso 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.

The idea behind Grupo Carso SAB and NXP Semiconductors NV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.