Correlation Between Melexis NV and NVIDIA
Can any of the company-specific risk be diversified away by investing in both Melexis NV 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 Melexis NV and NVIDIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melexis NV and NVIDIA, you can compare the effects of market volatilities on Melexis NV 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 Melexis NV with a short position of NVIDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melexis NV and NVIDIA.
Diversification Opportunities for Melexis NV and NVIDIA
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Melexis and NVIDIA is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Melexis NV and NVIDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA and Melexis NV 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 Melexis NV 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 Melexis NV i.e., Melexis NV and NVIDIA go up and down completely randomly.
Pair Corralation between Melexis NV and NVIDIA
Assuming the 90 days horizon Melexis NV is expected to under-perform the NVIDIA. But the pink sheet apears to be less risky and, when comparing its historical volatility, Melexis NV is 1.2 times less risky than NVIDIA. The pink sheet trades about -0.08 of its potential returns per unit of risk. The NVIDIA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 11,498 in NVIDIA on September 1, 2024 and sell it today you would earn a total of 2,327 from holding NVIDIA or generate 20.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Melexis NV vs. NVIDIA
Performance |
| Timeline |
| Melexis NV |
| NVIDIA |
Melexis NV and NVIDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melexis NV and NVIDIA
The main advantage of trading using opposite Melexis NV and NVIDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melexis NV 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.| Melexis NV vs. Power Integrations | Melexis NV vs. MACOM Technology Solutions | Melexis NV vs. Intchains Group Limited | Melexis NV vs. Vishay Intertechnology |
| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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