Correlation Between NVIDIA and KBC Groep
Can any of the company-specific risk be diversified away by investing in both NVIDIA and KBC Groep 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 KBC Groep into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and KBC Groep NV, you can compare the effects of market volatilities on NVIDIA and KBC Groep 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 KBC Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and KBC Groep.
Diversification Opportunities for NVIDIA and KBC Groep
Very good diversification
The 3 months correlation between NVIDIA and KBC is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and KBC Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC Groep NV 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 KBC Groep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC Groep NV has no effect on the direction of NVIDIA i.e., NVIDIA and KBC Groep go up and down completely randomly.
Pair Corralation between NVIDIA and KBC Groep
Given the investment horizon of 90 days NVIDIA is expected to generate 1.58 times more return on investment than KBC Groep. However, NVIDIA is 1.58 times more volatile than KBC Groep NV. It trades about 0.11 of its potential returns per unit of risk. KBC Groep NV is currently generating about 0.08 per unit of risk. If you would invest 13,956 in NVIDIA on August 24, 2024 and sell it today you would earn a total of 711.00 from holding NVIDIA or generate 5.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
NVIDIA vs. KBC Groep NV
Performance |
| Timeline |
| NVIDIA |
| KBC Groep NV |
NVIDIA and KBC Groep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and KBC Groep
The main advantage of trading using opposite NVIDIA and KBC Groep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, KBC Groep 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 KBC Groep will offset losses from the drop in KBC Groep's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| KBC Groep vs. DBS Group Holdings | KBC Groep vs. United Overseas Bank | KBC Groep vs. Overseas Chinese Banking | KBC Groep vs. China Minsh |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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