Correlation Between NVIDIA CDR and NovaGold Resources
Can any of the company-specific risk be diversified away by investing in both NVIDIA CDR and NovaGold Resources 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 NovaGold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA CDR and NovaGold Resources, you can compare the effects of market volatilities on NVIDIA CDR and NovaGold Resources 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 NovaGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA CDR and NovaGold Resources.
Diversification Opportunities for NVIDIA CDR and NovaGold Resources
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NVIDIA and NovaGold is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA CDR and NovaGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NovaGold Resources 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 NovaGold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NovaGold Resources has no effect on the direction of NVIDIA CDR i.e., NVIDIA CDR and NovaGold Resources go up and down completely randomly.
Pair Corralation between NVIDIA CDR and NovaGold Resources
Assuming the 90 days trading horizon NVIDIA CDR is expected to generate 0.87 times more return on investment than NovaGold Resources. However, NVIDIA CDR is 1.15 times less risky than NovaGold Resources. It trades about 0.06 of its potential returns per unit of risk. NovaGold Resources is currently generating about -0.03 per unit of risk. If you would invest 2,956 in NVIDIA CDR on August 28, 2024 and sell it today you would earn a total of 249.00 from holding NVIDIA CDR or generate 8.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA CDR vs. NovaGold Resources
Performance |
| Timeline |
| NVIDIA CDR |
| NovaGold Resources |
NVIDIA CDR and NovaGold Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA CDR and NovaGold Resources
The main advantage of trading using opposite NVIDIA CDR and NovaGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA CDR position performs unexpectedly, NovaGold Resources 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 NovaGold Resources will offset losses from the drop in NovaGold Resources' long position.| NVIDIA CDR vs. Birchtech Corp | NVIDIA CDR vs. Evertz Technologies Limited | NVIDIA CDR vs. Diamond Estates Wines | NVIDIA CDR vs. Lion One Metals |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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