Correlation Between NXP Semiconductors and Peoples Insurance

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

Diversification Opportunities for NXP Semiconductors and Peoples Insurance

0.83

Correlation Coefficient

NXP Semiconductors  Peoples Insurance

Very poor diversification

The 3 months correlation between NXP and Peoples is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding NXP Semiconductors NV and The Peoples Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Insurance 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 Peoples Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Insurance has no effect on the direction of NXP Semiconductors i.e., NXP Semiconductors and Peoples Insurance go up and down completely randomly.

Pair Corralation between NXP Semiconductors and Peoples Insurance

Assuming the 90 days trading horizon NXP Semiconductors is expected to generate 2.18 times less return on investment than Peoples Insurance. In addition to that, NXP Semiconductors is 1.08 times more volatile than The Peoples Insurance. It trades about 0.07 of its total potential returns per unit of risk. The Peoples Insurance is currently generating about 0.17 per unit of volatility. If you would invest  50.00  in The Peoples Insurance on April 25, 2025 and sell it today you would earn a total of  12.00  from holding The Peoples Insurance or generate 24.0% return on investment over 90 days.

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

NXP Semiconductors NV  vs.  The Peoples Insurance

NXP Semiconductors

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NXP Semiconductors NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, NXP Semiconductors may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Peoples Insurance

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Peoples Insurance are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Peoples Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NXP Semiconductors and Peoples Insurance

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

The idea behind NXP Semiconductors NV and The Peoples Insurance 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 Transaction History module to view history of all your transactions and understand their impact on performance.