Correlation Between NVIDIA and JAR
Can any of the company-specific risk be diversified away by investing in both NVIDIA and JAR 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 JAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and JAR, you can compare the effects of market volatilities on NVIDIA and JAR 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 JAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and JAR.
Diversification Opportunities for NVIDIA and JAR
Very good diversification
The 3 months correlation between NVIDIA and JAR is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and JAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAR 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 JAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAR has no effect on the direction of NVIDIA i.e., NVIDIA and JAR go up and down completely randomly.
Pair Corralation between NVIDIA and JAR
Given the investment horizon of 90 days NVIDIA is expected to generate 3.27 times more return on investment than JAR. However, NVIDIA is 3.27 times more volatile than JAR. It trades about 0.03 of its potential returns per unit of risk. JAR is currently generating about -0.19 per unit of risk. If you would invest 13,771 in NVIDIA on November 18, 2024 and sell it today you would earn a total of 114.00 from holding NVIDIA or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
NVIDIA vs. JAR
Performance |
| Timeline |
| NVIDIA |
| JAR |
NVIDIA and JAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and JAR
The main advantage of trading using opposite NVIDIA and JAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, JAR 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 JAR will offset losses from the drop in JAR's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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