Correlation Between NVIDIA and Locafy
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Locafy 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 Locafy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Locafy Limited, you can compare the effects of market volatilities on NVIDIA and Locafy 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 Locafy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Locafy.
Diversification Opportunities for NVIDIA and Locafy
Very weak diversification
The 3 months correlation between NVIDIA and Locafy is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Locafy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locafy Limited 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 Locafy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locafy Limited has no effect on the direction of NVIDIA i.e., NVIDIA and Locafy go up and down completely randomly.
Pair Corralation between NVIDIA and Locafy
Given the investment horizon of 90 days NVIDIA is expected to generate 49.14 times less return on investment than Locafy. But when comparing it to its historical volatility, NVIDIA is 45.5 times less risky than Locafy. It trades about 0.15 of its potential returns per unit of risk. Locafy Limited is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Locafy Limited on August 30, 2024 and sell it today you would earn a total of 833.00 from holding Locafy Limited or generate 4165.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 57.37% |
| Values | Daily Returns |
NVIDIA vs. Locafy Limited
Performance |
| Timeline |
| NVIDIA |
| Locafy Limited |
NVIDIA and Locafy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Locafy
The main advantage of trading using opposite NVIDIA and Locafy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Locafy 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 Locafy will offset losses from the drop in Locafy's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Locafy vs. Locafy | Locafy vs. Rail Vision Ltd | Locafy vs. Heartbeam Warrant | Locafy vs. Iveda Solutions Warrant |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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