Correlation Between NVIDIA and CEVA
Can any of the company-specific risk be diversified away by investing in both NVIDIA and CEVA 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 and CEVA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and CEVA Inc, you can compare the effects of market volatilities on NVIDIA and CEVA 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 with a short position of CEVA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and CEVA.
Diversification Opportunities for NVIDIA and CEVA
Poor diversification
The 3 months correlation between NVIDIA and CEVA is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and CEVA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEVA Inc and NVIDIA 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 are associated (or correlated) with CEVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEVA Inc has no effect on the direction of NVIDIA i.e., NVIDIA and CEVA go up and down completely randomly.
Pair Corralation between NVIDIA and CEVA
Assuming the 90 days trading horizon NVIDIA is expected to generate 1.03 times more return on investment than CEVA. However, NVIDIA is 1.03 times more volatile than CEVA Inc. It trades about 0.15 of its potential returns per unit of risk. CEVA Inc is currently generating about 0.02 per unit of risk. If you would invest 1,584 in NVIDIA on September 5, 2024 and sell it today you would earn a total of 11,644 from holding NVIDIA or generate 735.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
NVIDIA vs. CEVA Inc
Performance |
| Timeline |
| NVIDIA |
| CEVA Inc |
NVIDIA and CEVA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and CEVA
The main advantage of trading using opposite NVIDIA and CEVA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, CEVA 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 CEVA will offset losses from the drop in CEVA's long position.The idea behind NVIDIA and CEVA 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.| CEVA vs. DXC Technology Co | CEVA vs. Align Technology | CEVA vs. Computer And Technologies | CEVA vs. Jacquet Metal Service |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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