Correlation Between NVIDIA Corp and Henkel AG
Can any of the company-specific risk be diversified away by investing in both NVIDIA Corp and Henkel AG 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 NVIDIA Corp and Henkel AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA Corp and Henkel AG Co, you can compare the effects of market volatilities on NVIDIA Corp and Henkel AG 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 NVIDIA Corp with a short position of Henkel AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA Corp and Henkel AG.
Diversification Opportunities for NVIDIA Corp and Henkel AG
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NVIDIA and Henkel is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA Corp and Henkel AG Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henkel AG and NVIDIA 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 NVIDIA Corp are associated (or correlated) with Henkel AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henkel AG has no effect on the direction of NVIDIA Corp i.e., NVIDIA Corp and Henkel AG go up and down completely randomly.
Pair Corralation between NVIDIA Corp and Henkel AG
Assuming the 90 days trading horizon NVIDIA Corp is expected to generate 6.05 times more return on investment than Henkel AG. However, NVIDIA Corp is 6.05 times more volatile than Henkel AG Co. It trades about 0.1 of its potential returns per unit of risk. Henkel AG Co is currently generating about -0.09 per unit of risk. If you would invest 11,775 in NVIDIA Corp on November 28, 2024 and sell it today you would earn a total of 860.00 from holding NVIDIA Corp or generate 7.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA Corp vs. Henkel AG Co
Performance |
| Timeline |
| NVIDIA Corp |
| Henkel AG |
NVIDIA Corp and Henkel AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA Corp and Henkel AG
The main advantage of trading using opposite NVIDIA Corp and Henkel AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA Corp position performs unexpectedly, Henkel AG 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 Henkel AG will offset losses from the drop in Henkel AG's long position.| NVIDIA Corp vs. Eastinco Mining Exploration | NVIDIA Corp vs. Fulcrum Metals PLC | NVIDIA Corp vs. Team Internet Group | NVIDIA Corp vs. Air Products Chemicals |
| Henkel AG vs. Pets at Home | Henkel AG vs. Kinnevik Investment AB | Henkel AG vs. Lindsell Train Investment | Henkel AG vs. Smithson Investment Trust |
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 the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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