Correlation Between Starbucks Corp and Nxp Semiconductors

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Can any of the company-specific risk be diversified away by investing in both Starbucks Corp 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 Starbucks Corp and Nxp Semiconductors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Starbucks Corp and Nxp Semiconductors, you can compare the effects of market volatilities on Starbucks Corp 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 Starbucks Corp with a short position of Nxp Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starbucks Corp and Nxp Semiconductors.

Diversification Opportunities for Starbucks Corp and Nxp Semiconductors

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Starbucks and Nxp Semiconductors is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks Corp and Nxp Semiconductors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nxp Semiconductors and Starbucks Corp 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 Starbucks Corp 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 Starbucks Corp i.e., Starbucks Corp and Nxp Semiconductors go up and down completely randomly.

Pair Corralation between Starbucks Corp and Nxp Semiconductors

Given the investment horizon of 90 days Starbucks Corp is expected to generate 0.79 times more return on investment than Nxp Semiconductors. However, Starbucks Corp is 1.26 times less risky than Nxp Semiconductors. It trades about 0.03 of its potential returns per unit of risk. Nxp Semiconductors is currently generating about -0.17 per unit of risk. If you would invest  8,491  in Starbucks Corp on July 2, 2022 and sell it today you would earn a total of  166.00  from holding Starbucks Corp or generate 1.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Starbucks Corp  vs.  Nxp Semiconductors

 Performance (%) 
       Timeline  
Starbucks Corp 
Starbucks Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Starbucks Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Starbucks Corp may actually be approaching a critical reversion point that can send shares even higher in October 2022.

Starbucks Price Channel

Nxp Semiconductors 
Nxp Semiconductors Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Nxp Semiconductors are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Nxp Semiconductors is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Nxp Semiconductors Price Channel

Starbucks Corp and Nxp Semiconductors Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Starbucks Corp and Nxp Semiconductors

The main advantage of trading using opposite Starbucks Corp and Nxp Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbucks Corp 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.
Starbucks Corp vs. Amazon Inc
The idea behind Starbucks Corp and Nxp Semiconductors 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.
Nxp Semiconductors vs. Amazon Inc
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 Transaction History module to view history of all your transactions and understand their impact on performance.

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