Correlation Between NVIDIA and Apple
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Apple 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 Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Apple Inc, you can compare the effects of market volatilities on NVIDIA and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Apple.
Diversification Opportunities for NVIDIA and Apple
Very weak diversification
The 3 months correlation between NVIDIA and Apple is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of NVIDIA i.e., NVIDIA and Apple go up and down completely randomly.
Pair Corralation between NVIDIA and Apple
Given the investment horizon of 90 days NVIDIA is expected to generate 2.34 times more return on investment than Apple. However, NVIDIA is 2.34 times more volatile than Apple Inc. It trades about 0.03 of its potential returns per unit of risk. Apple Inc is currently generating about 0.0 per unit of risk. If you would invest 14,041 in NVIDIA on August 25, 2024 and sell it today you would earn a total of 154.00 from holding NVIDIA or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. Apple Inc
Performance |
| Timeline |
| NVIDIA |
| Apple Inc |
NVIDIA and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Apple
The main advantage of trading using opposite NVIDIA and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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