Correlation Between NXP Semiconductors and Fica Empreendimentos

Can any of the company-specific risk be diversified away by investing in both NXP Semiconductors and Fica Empreendimentos 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 Fica Empreendimentos 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 Fica Empreendimentos Imobiliarios, you can compare the effects of market volatilities on NXP Semiconductors and Fica Empreendimentos 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 Fica Empreendimentos. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXP Semiconductors and Fica Empreendimentos.

Diversification Opportunities for NXP Semiconductors and Fica Empreendimentos

0.19

Correlation Coefficient

NXP Semiconductors  Fica Empreendimentos

Average diversification

The 3 months correlation between NXP and Fica is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding NXP Semiconductors NV and Fica Empreendimentos Imobiliar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fica Empreendimentos 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 Fica Empreendimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fica Empreendimentos has no effect on the direction of NXP Semiconductors i.e., NXP Semiconductors and Fica Empreendimentos go up and down completely randomly.

Pair Corralation between NXP Semiconductors and Fica Empreendimentos

Assuming the 90 days trading horizon NXP Semiconductors NV is expected to under-perform the Fica Empreendimentos. In addition to that, NXP Semiconductors is 1.07 times more volatile than Fica Empreendimentos Imobiliarios. It trades about -0.07 of its total potential returns per unit of risk. Fica Empreendimentos Imobiliarios is currently generating about -0.01 per unit of volatility. If you would invest  910.00  in Fica Empreendimentos Imobiliarios on December 21, 2024 and sell it today you would lose (25.00) from holding Fica Empreendimentos Imobiliarios or give up 2.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

NXP Semiconductors NV  vs.  Fica Empreendimentos Imobiliar

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. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Fica Empreendimentos

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fica Empreendimentos Imobiliarios has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fica Empreendimentos 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 NXP Semiconductors and Fica Empreendimentos

The main advantage of trading using opposite NXP Semiconductors and Fica Empreendimentos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXP Semiconductors position performs unexpectedly, Fica Empreendimentos 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 Fica Empreendimentos will offset losses from the drop in Fica Empreendimentos' long position.

The idea behind NXP Semiconductors NV and Fica Empreendimentos Imobiliarios 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.