Correlation Between NVIDIA CDR and Canada Goose

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Can any of the company-specific risk be diversified away by investing in both NVIDIA CDR and Canada Goose 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 CDR and Canada Goose into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA CDR and Canada Goose Holdings, you can compare the effects of market volatilities on NVIDIA CDR and Canada Goose 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 CDR with a short position of Canada Goose. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA CDR and Canada Goose.

Diversification Opportunities for NVIDIA CDR and Canada Goose

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between NVIDIA and Canada is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA CDR and Canada Goose Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canada Goose Holdings and NVIDIA CDR 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 CDR are associated (or correlated) with Canada Goose. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canada Goose Holdings has no effect on the direction of NVIDIA CDR i.e., NVIDIA CDR and Canada Goose go up and down completely randomly.

Pair Corralation between NVIDIA CDR and Canada Goose

Assuming the 90 days trading horizon NVIDIA CDR is expected to generate 1.3 times more return on investment than Canada Goose. However, NVIDIA CDR is 1.3 times more volatile than Canada Goose Holdings. It trades about 0.01 of its potential returns per unit of risk. Canada Goose Holdings is currently generating about -0.2 per unit of risk. If you would invest  3,317  in NVIDIA CDR on August 26, 2024 and sell it today you would earn a total of  6.00  from holding NVIDIA CDR or generate 0.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

NVIDIA CDR  vs.  Canada Goose Holdings

 Performance 
       Timeline  
NVIDIA CDR 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA CDR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, NVIDIA CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.
Canada Goose Holdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Canada Goose Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

NVIDIA CDR and Canada Goose Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NVIDIA CDR and Canada Goose

The main advantage of trading using opposite NVIDIA CDR and Canada Goose positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA CDR position performs unexpectedly, Canada Goose 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 Canada Goose will offset losses from the drop in Canada Goose's long position.
The idea behind NVIDIA CDR and Canada Goose Holdings 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.
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 Transaction History module to view history of all your transactions and understand their impact on performance.

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