Correlation Between NVIDIA and Lufax Holding
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Lufax Holding 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 Lufax Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Lufax Holding, you can compare the effects of market volatilities on NVIDIA and Lufax Holding 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 Lufax Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Lufax Holding.
Diversification Opportunities for NVIDIA and Lufax Holding
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between NVIDIA and Lufax is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Lufax Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lufax Holding 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 Lufax Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lufax Holding has no effect on the direction of NVIDIA i.e., NVIDIA and Lufax Holding go up and down completely randomly.
Pair Corralation between NVIDIA and Lufax Holding
Given the investment horizon of 90 days NVIDIA is expected to generate 0.56 times more return on investment than Lufax Holding. However, NVIDIA is 1.78 times less risky than Lufax Holding. It trades about 0.12 of its potential returns per unit of risk. Lufax Holding is currently generating about 0.03 per unit of risk. If you would invest 4,695 in NVIDIA on September 12, 2024 and sell it today you would earn a total of 8,812 from holding NVIDIA or generate 187.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. Lufax Holding
Performance |
| Timeline |
| NVIDIA |
| Lufax Holding |
NVIDIA and Lufax Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Lufax Holding
The main advantage of trading using opposite NVIDIA and Lufax Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Lufax Holding 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 Lufax Holding will offset losses from the drop in Lufax Holding's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Lufax Holding vs. Victory Integrity Smallmid Cap | Lufax Holding vs. Hilton Worldwide Holdings | Lufax Holding vs. NVIDIA | Lufax Holding vs. JPMorgan Chase Co |
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 Stocks Directory module to find actively traded stocks across global markets.
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