Correlation Between Connecticut Light and NVIDIA
Can any of the company-specific risk be diversified away by investing in both Connecticut Light and NVIDIA 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 Connecticut Light and NVIDIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Connecticut Light and NVIDIA, you can compare the effects of market volatilities on Connecticut Light and NVIDIA 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 Connecticut Light with a short position of NVIDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Connecticut Light and NVIDIA.
Diversification Opportunities for Connecticut Light and NVIDIA
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Connecticut and NVIDIA is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding The Connecticut Light and NVIDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA and Connecticut Light 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 The Connecticut Light are associated (or correlated) with NVIDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA has no effect on the direction of Connecticut Light i.e., Connecticut Light and NVIDIA go up and down completely randomly.
Pair Corralation between Connecticut Light and NVIDIA
Assuming the 90 days horizon Connecticut Light is expected to generate 3.39 times less return on investment than NVIDIA. In addition to that, Connecticut Light is 1.62 times more volatile than NVIDIA. It trades about 0.02 of its total potential returns per unit of risk. NVIDIA is currently generating about 0.13 per unit of volatility. If you would invest 3,850 in NVIDIA on August 31, 2024 and sell it today you would earn a total of 9,975 from holding NVIDIA or generate 259.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 70.86% |
| Values | Daily Returns |
The Connecticut Light vs. NVIDIA
Performance |
| Timeline |
| Connecticut Light |
| NVIDIA |
Connecticut Light and NVIDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Connecticut Light and NVIDIA
The main advantage of trading using opposite Connecticut Light and NVIDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Connecticut Light position performs unexpectedly, NVIDIA 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 NVIDIA will offset losses from the drop in NVIDIA's long position.| Connecticut Light vs. Southern Company | Connecticut Light vs. Duke Energy | Connecticut Light vs. Duke Energy | Connecticut Light vs. National Grid PLC |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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