Correlation Between NVIDIA and Civitas Resources
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Civitas 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 and Civitas Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Civitas Resources, you can compare the effects of market volatilities on NVIDIA and Civitas 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 with a short position of Civitas Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Civitas Resources.
Diversification Opportunities for NVIDIA and Civitas Resources
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NVIDIA and Civitas is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Civitas Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civitas Resources 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 Civitas Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Civitas Resources has no effect on the direction of NVIDIA i.e., NVIDIA and Civitas Resources go up and down completely randomly.
Pair Corralation between NVIDIA and Civitas Resources
Given the investment horizon of 90 days NVIDIA is expected to generate 5.66 times less return on investment than Civitas Resources. But when comparing it to its historical volatility, NVIDIA is 12.22 times less risky than Civitas Resources. It trades about 0.11 of its potential returns per unit of risk. Civitas Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 160.00 in Civitas Resources on August 25, 2024 and sell it today you would lose (143.00) from holding Civitas Resources or give up 89.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. Civitas Resources
Performance |
| Timeline |
| NVIDIA |
| Civitas Resources |
NVIDIA and Civitas Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Civitas Resources
The main advantage of trading using opposite NVIDIA and Civitas Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Civitas 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 Civitas Resources will offset losses from the drop in Civitas Resources' long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Civitas Resources vs. Legacy Education | Civitas Resources vs. NVIDIA | Civitas Resources vs. Apple Inc | Civitas Resources vs. Microsoft |
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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