Correlation Between NVIDIA and Intel Corp
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Intel Corp 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 Intel Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Intel Corp CEDEAR, you can compare the effects of market volatilities on NVIDIA and Intel Corp 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 Intel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Intel Corp.
Diversification Opportunities for NVIDIA and Intel Corp
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NVIDIA and Intel is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Intel Corp CEDEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel Corp CEDEAR 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 Intel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel Corp CEDEAR has no effect on the direction of NVIDIA i.e., NVIDIA and Intel Corp go up and down completely randomly.
Pair Corralation between NVIDIA and Intel Corp
Assuming the 90 days trading horizon NVIDIA is expected to generate 0.87 times more return on investment than Intel Corp. However, NVIDIA is 1.14 times less risky than Intel Corp. It trades about -0.22 of its potential returns per unit of risk. Intel Corp CEDEAR is currently generating about -0.49 per unit of risk. If you would invest 702,000 in NVIDIA on September 12, 2024 and sell it today you would lose (79,000) from holding NVIDIA or give up 11.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. Intel Corp CEDEAR
Performance |
| Timeline |
| NVIDIA |
| Intel Corp CEDEAR |
NVIDIA and Intel Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Intel Corp
The main advantage of trading using opposite NVIDIA and Intel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Intel Corp 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 Intel Corp will offset losses from the drop in Intel Corp's long position.| NVIDIA vs. Harmony Gold Mining | NVIDIA vs. Telecom Argentina | NVIDIA vs. Transportadora de Gas | NVIDIA vs. United States Steel |
| Intel Corp vs. NVIDIA | Intel Corp vs. Edesa Holding SA | Intel Corp vs. Longvie SA | Intel Corp vs. Vista Energy, SAB |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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