Correlation Between NVIDIA and Joby Aviation
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Joby Aviation 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 Joby Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Joby Aviation, you can compare the effects of market volatilities on NVIDIA and Joby Aviation 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 Joby Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Joby Aviation.
Diversification Opportunities for NVIDIA and Joby Aviation
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NVIDIA and Joby is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Joby Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joby Aviation 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 Joby Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joby Aviation has no effect on the direction of NVIDIA i.e., NVIDIA and Joby Aviation go up and down completely randomly.
Pair Corralation between NVIDIA and Joby Aviation
Given the investment horizon of 90 days NVIDIA is expected to generate 1.18 times less return on investment than Joby Aviation. But when comparing it to its historical volatility, NVIDIA is 2.7 times less risky than Joby Aviation. It trades about 0.15 of its potential returns per unit of risk. Joby Aviation is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 64.00 in Joby Aviation on August 28, 2024 and sell it today you would earn a total of 134.00 from holding Joby Aviation or generate 209.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. Joby Aviation
Performance |
| Timeline |
| NVIDIA |
| Joby Aviation |
NVIDIA and Joby Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Joby Aviation
The main advantage of trading using opposite NVIDIA and Joby Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Joby Aviation 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 Joby Aviation will offset losses from the drop in Joby Aviation'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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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