Correlation Between NVIDIA and Laurentian Bank
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Laurentian Bank 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 Laurentian Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Laurentian Bank, you can compare the effects of market volatilities on NVIDIA and Laurentian Bank 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 Laurentian Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Laurentian Bank.
Diversification Opportunities for NVIDIA and Laurentian Bank
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NVIDIA and Laurentian is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Laurentian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laurentian Bank 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 Laurentian Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laurentian Bank has no effect on the direction of NVIDIA i.e., NVIDIA and Laurentian Bank go up and down completely randomly.
Pair Corralation between NVIDIA and Laurentian Bank
Given the investment horizon of 90 days NVIDIA is expected to generate 1.21 times less return on investment than Laurentian Bank. In addition to that, NVIDIA is 1.97 times more volatile than Laurentian Bank. It trades about 0.11 of its total potential returns per unit of risk. Laurentian Bank is currently generating about 0.26 per unit of volatility. If you would invest 2,670 in Laurentian Bank on August 24, 2024 and sell it today you would earn a total of 180.00 from holding Laurentian Bank or generate 6.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. Laurentian Bank
Performance |
| Timeline |
| NVIDIA |
| Laurentian Bank |
NVIDIA and Laurentian Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Laurentian Bank
The main advantage of trading using opposite NVIDIA and Laurentian Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Laurentian Bank 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 Laurentian Bank will offset losses from the drop in Laurentian Bank's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Laurentian Bank vs. Walmart Inc CDR | Laurentian Bank vs. Amazon CDR | Laurentian Bank vs. UPS CDR | Laurentian Bank vs. HOME DEPOT CDR |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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