Correlation Between NVIDIA and Impala Platinum
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Impala Platinum 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 Impala Platinum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Impala Platinum Holdings, you can compare the effects of market volatilities on NVIDIA and Impala Platinum 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 Impala Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Impala Platinum.
Diversification Opportunities for NVIDIA and Impala Platinum
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NVIDIA and Impala is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Impala Platinum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impala Platinum Holdings 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 Impala Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impala Platinum Holdings has no effect on the direction of NVIDIA i.e., NVIDIA and Impala Platinum go up and down completely randomly.
Pair Corralation between NVIDIA and Impala Platinum
Given the investment horizon of 90 days NVIDIA is expected to generate 0.71 times more return on investment than Impala Platinum. However, NVIDIA is 1.41 times less risky than Impala Platinum. It trades about -0.04 of its potential returns per unit of risk. Impala Platinum Holdings is currently generating about -0.2 per unit of risk. If you would invest 13,934 in NVIDIA on August 31, 2024 and sell it today you would lose (400.00) from holding NVIDIA or give up 2.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. Impala Platinum Holdings
Performance |
| Timeline |
| NVIDIA |
| Impala Platinum Holdings |
NVIDIA and Impala Platinum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Impala Platinum
The main advantage of trading using opposite NVIDIA and Impala Platinum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Impala Platinum 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 Impala Platinum will offset losses from the drop in Impala Platinum's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Impala Platinum vs. Anglo American Platinum | Impala Platinum vs. Sibanye Gold Ltd | Impala Platinum vs. Anglo American PLC | Impala Platinum vs. Fortescue Metals 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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