Correlation Between LION ONE and NVIDIA
Can any of the company-specific risk be diversified away by investing in both LION ONE 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 LION ONE and NVIDIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LION ONE METALS and NVIDIA, you can compare the effects of market volatilities on LION ONE 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 LION ONE with a short position of NVIDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and NVIDIA.
Diversification Opportunities for LION ONE and NVIDIA
Modest diversification
The 3 months correlation between LION and NVIDIA is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and NVIDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA and LION ONE 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 LION ONE METALS 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 LION ONE i.e., LION ONE and NVIDIA go up and down completely randomly.
Pair Corralation between LION ONE and NVIDIA
Assuming the 90 days trading horizon LION ONE is expected to generate 6.88 times less return on investment than NVIDIA. In addition to that, LION ONE is 1.36 times more volatile than NVIDIA. It trades about 0.02 of its total potential returns per unit of risk. NVIDIA is currently generating about 0.17 per unit of volatility. If you would invest 10,069 in NVIDIA on September 3, 2024 and sell it today you would earn a total of 3,037 from holding NVIDIA or generate 30.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LION ONE METALS vs. NVIDIA
Performance |
| Timeline |
| LION ONE METALS |
| NVIDIA |
LION ONE and NVIDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and NVIDIA
The main advantage of trading using opposite LION ONE and NVIDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE 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.| LION ONE vs. HomeToGo SE | LION ONE vs. NORTHEAST UTILITIES | LION ONE vs. SBM OFFSHORE | LION ONE vs. Zijin Mining Group |
| NVIDIA vs. Lion One Metals | NVIDIA vs. LION ONE METALS | NVIDIA vs. NISSAN CHEMICAL IND | NVIDIA vs. X FAB Silicon Foundries |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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