Correlation Between NVIDIA and Alcon AG
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Alcon AG 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 Alcon AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Alcon AG, you can compare the effects of market volatilities on NVIDIA and Alcon AG 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 Alcon AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Alcon AG.
Diversification Opportunities for NVIDIA and Alcon AG
Excellent diversification
The 3 months correlation between NVIDIA and Alcon is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Alcon AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcon AG 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 Alcon AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcon AG has no effect on the direction of NVIDIA i.e., NVIDIA and Alcon AG go up and down completely randomly.
Pair Corralation between NVIDIA and Alcon AG
Given the investment horizon of 90 days NVIDIA is expected to generate 1.71 times more return on investment than Alcon AG. However, NVIDIA is 1.71 times more volatile than Alcon AG. It trades about -0.05 of its potential returns per unit of risk. Alcon AG is currently generating about -0.3 per unit of risk. If you would invest 14,052 in NVIDIA on August 28, 2024 and sell it today you would lose (450.00) from holding NVIDIA or give up 3.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. Alcon AG
Performance |
| Timeline |
| NVIDIA |
| Alcon AG |
NVIDIA and Alcon AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Alcon AG
The main advantage of trading using opposite NVIDIA and Alcon AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Alcon AG 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 Alcon AG will offset losses from the drop in Alcon AG's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Alcon AG vs. Heartbeam | Alcon AG vs. EUDA Health Holdings | Alcon AG vs. Nutex Health | Alcon AG vs. Healthcare Triangle |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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