Correlation Between Seagate Technology and NXP Semiconductors

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

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

Diversification Opportunities for Seagate Technology and NXP Semiconductors

-0.74

Correlation Coefficient

Seagate Technology  NXP Semiconductors

Pay attention - limited upside

The 3 months correlation between Seagate and NXP is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Seagate Technology PLC and NXP Semiconductors NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXP Semiconductors and Seagate Technology 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 Seagate Technology PLC 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 Seagate Technology i.e., Seagate Technology and NXP Semiconductors go up and down completely randomly.

Pair Corralation between Seagate Technology and NXP Semiconductors

Considering the 90-day investment horizon Seagate Technology PLC is expected to generate 2.02 times more return on investment than NXP Semiconductors. However, Seagate Technology is 2.02 times more volatile than NXP Semiconductors NV. It trades about 0.2 of its potential returns per unit of risk. NXP Semiconductors NV is currently generating about -0.11 per unit of risk. If you would invest  15,820  in Seagate Technology PLC on August 18, 2025 and sell it today you would earn a total of  10,001  from holding Seagate Technology PLC or generate 63.22% return on investment over 90 days.

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

Seagate Technology PLC  vs.  NXP Semiconductors NV

Seagate Technology PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Seagate Technology PLC are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Seagate Technology showed solid returns over the last few months and may actually be approaching a breakup point.

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 weak 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.

Pair Trading with Seagate Technology and NXP Semiconductors

The main advantage of trading using opposite Seagate Technology and NXP Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seagate Technology 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 Seagate Technology PLC 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.