Correlation Between NVIDIA and Leonardo SpA
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Leonardo SpA 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 Leonardo SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Leonardo SpA ADR, you can compare the effects of market volatilities on NVIDIA and Leonardo SpA 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 Leonardo SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Leonardo SpA.
Diversification Opportunities for NVIDIA and Leonardo SpA
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NVIDIA and Leonardo is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Leonardo SpA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leonardo SpA ADR 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 Leonardo SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leonardo SpA ADR has no effect on the direction of NVIDIA i.e., NVIDIA and Leonardo SpA go up and down completely randomly.
Pair Corralation between NVIDIA and Leonardo SpA
Given the investment horizon of 90 days NVIDIA is expected to under-perform the Leonardo SpA. In addition to that, NVIDIA is 1.27 times more volatile than Leonardo SpA ADR. It trades about -0.04 of its total potential returns per unit of risk. Leonardo SpA ADR is currently generating about 0.22 per unit of volatility. If you would invest 1,199 in Leonardo SpA ADR on August 31, 2024 and sell it today you would earn a total of 116.00 from holding Leonardo SpA ADR or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. Leonardo SpA ADR
Performance |
| Timeline |
| NVIDIA |
| Leonardo SpA ADR |
NVIDIA and Leonardo SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Leonardo SpA
The main advantage of trading using opposite NVIDIA and Leonardo SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Leonardo SpA 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 Leonardo SpA will offset losses from the drop in Leonardo SpA's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Leonardo SpA vs. Leonardo Spa | Leonardo SpA vs. Thales SA ADR | Leonardo SpA vs. Safran SA | Leonardo SpA vs. Rheinmetall AG ADR |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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