Correlation Between NVIDIA and Clean Energy
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Clean Energy 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 Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Clean Energy Fuels, you can compare the effects of market volatilities on NVIDIA and Clean Energy 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 Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Clean Energy.
Diversification Opportunities for NVIDIA and Clean Energy
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between NVIDIA and Clean is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Clean Energy Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Energy Fuels 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 Clean Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Energy Fuels has no effect on the direction of NVIDIA i.e., NVIDIA and Clean Energy go up and down completely randomly.
Pair Corralation between NVIDIA and Clean Energy
Assuming the 90 days trading horizon NVIDIA is expected to generate 0.81 times more return on investment than Clean Energy. However, NVIDIA is 1.23 times less risky than Clean Energy. It trades about 0.15 of its potential returns per unit of risk. Clean Energy Fuels is currently generating about -0.03 per unit of risk. If you would invest 1,595 in NVIDIA on August 25, 2024 and sell it today you would earn a total of 12,067 from holding NVIDIA or generate 756.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
NVIDIA vs. Clean Energy Fuels
Performance |
| Timeline |
| NVIDIA |
| Clean Energy Fuels |
NVIDIA and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Clean Energy
The main advantage of trading using opposite NVIDIA and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Clean Energy 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 Clean Energy will offset losses from the drop in Clean Energy's long position.| NVIDIA vs. Clean Energy Fuels | NVIDIA vs. ARISTOCRAT LEISURE | NVIDIA vs. Universal Display | NVIDIA vs. JD SPORTS FASH |
| Clean Energy vs. Superior Plus Corp | Clean Energy vs. NMI Holdings | Clean Energy vs. Origin Agritech | Clean Energy vs. SIVERS SEMICONDUCTORS AB |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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