Correlation Between Amazon and NXP Semiconductors
Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and NXP Semiconductors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and NXP Semiconductors NV, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of NXP Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and NXP Semiconductors.
Diversification Opportunities for Amazon and NXP Semiconductors
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amazon and NXP is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and NXP Semiconductors NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXP Semiconductors and Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and NXP Semiconductors go up and down completely randomly.
Pair Corralation between Amazon and NXP Semiconductors
Assuming the 90 days trading horizon Amazon Inc is expected to generate 1.14 times more return on investment than NXP Semiconductors. However, Amazon is 1.14 times more volatile than NXP Semiconductors NV. It trades about 0.27 of its potential returns per unit of risk. NXP Semiconductors NV is currently generating about 0.25 per unit of risk. If you would invest 5,802 in Amazon Inc on April 20, 2025 and sell it today you would earn a total of 520.00 from holding Amazon Inc or generate 8.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
Amazon Inc vs. NXP Semiconductors NV
Performance |
Timeline |
Amazon Inc |
NXP Semiconductors |
Amazon and NXP Semiconductors Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Amazon and NXP Semiconductors
The main advantage of trading using opposite Amazon and NXP Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.Amazon vs. The Trade Desk | Amazon vs. Vulcan Materials | Amazon vs. Zoom Video Communications | Amazon vs. Rbr Top Offices |
NXP Semiconductors vs. Check Point Software | NXP Semiconductors vs. ON Semiconductor | NXP Semiconductors vs. Taiwan Semiconductor Manufacturing | NXP Semiconductors vs. Marvell Technology |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Stocks Directory Find actively traded stocks across global markets | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Global Correlations Find global opportunities by holding instruments from different markets | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |