Correlation Between NXP Semiconductors and Rambus

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

Diversification Opportunities for NXP Semiconductors and Rambus

0.57

Correlation Coefficient

NXP Semiconductors  Rambus

Very weak diversification

The 3 months correlation between NXP and Rambus is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding NXP Semiconductors NV and Rambus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rambus Inc 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 Rambus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rambus Inc has no effect on the direction of NXP Semiconductors i.e., NXP Semiconductors and Rambus go up and down completely randomly.

Pair Corralation between NXP Semiconductors and Rambus

Given the investment horizon of 90 days NXP Semiconductors is expected to generate 2.46 times less return on investment than Rambus. But when comparing it to its historical volatility, NXP Semiconductors NV is 1.21 times less risky than Rambus. It trades about 0.1 of its potential returns per unit of risk. Rambus Inc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  5,463  in Rambus Inc on May 21, 2025 and sell it today you would earn a total of  2,114  from holding Rambus Inc or generate 38.7% 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.  Rambus Inc

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 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, NXP Semiconductors demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Rambus Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rambus Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Rambus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NXP Semiconductors and Rambus

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

The idea behind NXP Semiconductors NV and Rambus Inc 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.