Correlation Between NVIDIA and Arcelormittal
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Arcelormittal 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 Arcelormittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Arcelormittal, you can compare the effects of market volatilities on NVIDIA and Arcelormittal 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 Arcelormittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Arcelormittal.
Diversification Opportunities for NVIDIA and Arcelormittal
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NVIDIA and Arcelormittal is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Arcelormittal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcelormittal 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 Arcelormittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcelormittal has no effect on the direction of NVIDIA i.e., NVIDIA and Arcelormittal go up and down completely randomly.
Pair Corralation between NVIDIA and Arcelormittal
Given the investment horizon of 90 days NVIDIA is expected to generate 1.43 times more return on investment than Arcelormittal. However, NVIDIA is 1.43 times more volatile than Arcelormittal. It trades about 0.16 of its potential returns per unit of risk. Arcelormittal is currently generating about -0.01 per unit of risk. If you would invest 1,474 in NVIDIA on August 26, 2024 and sell it today you would earn a total of 12,721 from holding NVIDIA or generate 863.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 19.71% |
| Values | Daily Returns |
NVIDIA vs. Arcelormittal
Performance |
| Timeline |
| NVIDIA |
| Arcelormittal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
NVIDIA and Arcelormittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Arcelormittal
The main advantage of trading using opposite NVIDIA and Arcelormittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Arcelormittal 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 Arcelormittal will offset losses from the drop in Arcelormittal's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Arcelormittal vs. Affiliated Managers Group | Arcelormittal vs. Maiden Holdings North | Arcelormittal vs. Credit Enhanced Corts | Arcelormittal vs. Affiliated Managers Group, |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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