Correlation Between NVIDIA and Infineon Technologies
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Infineon Technologies 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 Infineon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Infineon Technologies AG, you can compare the effects of market volatilities on NVIDIA and Infineon Technologies 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 Infineon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Infineon Technologies.
Diversification Opportunities for NVIDIA and Infineon Technologies
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NVIDIA and Infineon is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Infineon Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infineon Technologies 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 Infineon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infineon Technologies has no effect on the direction of NVIDIA i.e., NVIDIA and Infineon Technologies go up and down completely randomly.
Pair Corralation between NVIDIA and Infineon Technologies
Given the investment horizon of 90 days NVIDIA is expected to under-perform the Infineon Technologies. But the stock apears to be less risky and, when comparing its historical volatility, NVIDIA is 1.05 times less risky than Infineon Technologies. The stock trades about -0.03 of its potential returns per unit of risk. The Infineon Technologies AG is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 3,320 in Infineon Technologies AG on August 29, 2024 and sell it today you would lose (65.00) from holding Infineon Technologies AG or give up 1.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. Infineon Technologies AG
Performance |
| Timeline |
| NVIDIA |
| Infineon Technologies |
NVIDIA and Infineon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Infineon Technologies
The main advantage of trading using opposite NVIDIA and Infineon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Infineon Technologies 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 Infineon Technologies will offset losses from the drop in Infineon Technologies' long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Infineon Technologies vs. NVIDIA | Infineon Technologies vs. Intel | Infineon Technologies vs. Taiwan Semiconductor Manufacturing | Infineon Technologies vs. Marvell Technology Group |
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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