Correlation Between First Solar and NXP Semiconductors

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

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

Diversification Opportunities for First Solar and NXP Semiconductors

0.37

Correlation Coefficient

First Solar  NXP Semiconductors

Weak diversification

The 3 months correlation between First and NXP is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding First Solar and NXP Semiconductors NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXP Semiconductors and First Solar 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 First Solar 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 First Solar i.e., First Solar and NXP Semiconductors go up and down completely randomly.

Pair Corralation between First Solar and NXP Semiconductors

Given the investment horizon of 90 days First Solar is expected to generate 1.78 times more return on investment than NXP Semiconductors. However, First Solar is 1.78 times more volatile than NXP Semiconductors NV. It trades about 0.09 of its potential returns per unit of risk. NXP Semiconductors NV is currently generating about 0.09 per unit of risk. If you would invest  16,722  in First Solar on May 20, 2025 and sell it today you would earn a total of  3,273  from holding First Solar or generate 19.57% return on investment over 90 days.

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

First Solar  vs.  NXP Semiconductors NV

First Solar

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in First Solar are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile essential indicators, First Solar reported solid returns over the last few months and may actually be approaching a breakup point.

NXP Semiconductors

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in NXP Semiconductors NV are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, NXP Semiconductors may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with First Solar and NXP Semiconductors

The main advantage of trading using opposite First Solar and NXP Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Solar 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 First Solar 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 Commodity Directory module to find actively traded commodities issued by global exchanges.