Correlation Between NVIDIA and LAir Liquide
Can any of the company-specific risk be diversified away by investing in both NVIDIA and LAir Liquide 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 LAir Liquide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and LAir Liquide SA, you can compare the effects of market volatilities on NVIDIA and LAir Liquide 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 LAir Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and LAir Liquide.
Diversification Opportunities for NVIDIA and LAir Liquide
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NVIDIA and LAir is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and LAir Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAir Liquide SA 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 LAir Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAir Liquide SA has no effect on the direction of NVIDIA i.e., NVIDIA and LAir Liquide go up and down completely randomly.
Pair Corralation between NVIDIA and LAir Liquide
Given the investment horizon of 90 days NVIDIA is expected to generate 2.33 times more return on investment than LAir Liquide. However, NVIDIA is 2.33 times more volatile than LAir Liquide SA. It trades about 0.15 of its potential returns per unit of risk. LAir Liquide SA is currently generating about 0.05 per unit of risk. If you would invest 1,699 in NVIDIA on August 30, 2024 and sell it today you would earn a total of 11,835 from holding NVIDIA or generate 696.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. LAir Liquide SA
Performance |
| Timeline |
| NVIDIA |
| LAir Liquide SA |
NVIDIA and LAir Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and LAir Liquide
The main advantage of trading using opposite NVIDIA and LAir Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, LAir Liquide 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 LAir Liquide will offset losses from the drop in LAir Liquide's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| LAir Liquide vs. Akzo Nobel NV | LAir Liquide vs. Avoca LLC | LAir Liquide vs. Arkema SA ADR | LAir Liquide vs. HUMANA INC |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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