Correlation Between NXP Semiconductors and Custom Truck

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

Diversification Opportunities for NXP Semiconductors and Custom Truck

0.46

Correlation Coefficient

NXP Semiconductors  Custom Truck

Very weak diversification

The 3 months correlation between NXP and Custom is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding NXP Semiconductors NV and Custom Truck One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Custom Truck One 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 Custom Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Custom Truck One has no effect on the direction of NXP Semiconductors i.e., NXP Semiconductors and Custom Truck go up and down completely randomly.

Pair Corralation between NXP Semiconductors and Custom Truck

Given the investment horizon of 90 days NXP Semiconductors NV is expected to under-perform the Custom Truck. But the stock apears to be less risky and, when comparing its historical volatility, NXP Semiconductors NV is 1.51 times less risky than Custom Truck. The stock trades about -0.12 of its potential returns per unit of risk. The Custom Truck One is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  614.00  in Custom Truck One on August 31, 2025 and sell it today you would earn a total of  25.00  from holding Custom Truck One or generate 4.07% return on investment over 90 days.

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

NXP Semiconductors NV  vs.  Custom Truck One

NXP Semiconductors

Risk-Adjusted Performance

Weakest

Over the last 90 days NXP Semiconductors NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Custom Truck One

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Custom Truck One are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Custom Truck may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Pair Trading with NXP Semiconductors and Custom Truck

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

The idea behind NXP Semiconductors NV and Custom Truck One 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.