Correlation Between NVIDIA and Metro
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Metro 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 Metro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Metro Inc, you can compare the effects of market volatilities on NVIDIA and Metro 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 Metro. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Metro.
Diversification Opportunities for NVIDIA and Metro
Very good diversification
The 3 months correlation between NVIDIA and Metro is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Metro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Inc 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 Metro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Inc has no effect on the direction of NVIDIA i.e., NVIDIA and Metro go up and down completely randomly.
Pair Corralation between NVIDIA and Metro
Given the investment horizon of 90 days NVIDIA is expected to generate 3.3 times more return on investment than Metro. However, NVIDIA is 3.3 times more volatile than Metro Inc. It trades about 0.05 of its potential returns per unit of risk. Metro Inc is currently generating about 0.15 per unit of risk. If you would invest 12,242 in NVIDIA on September 3, 2024 and sell it today you would earn a total of 1,583 from holding NVIDIA or generate 12.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
NVIDIA vs. Metro Inc
Performance |
| Timeline |
| NVIDIA |
| Metro Inc |
NVIDIA and Metro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Metro
The main advantage of trading using opposite NVIDIA and Metro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Metro 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 Metro will offset losses from the drop in Metro's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Metro vs. Natural Grocers by | Metro vs. Sprouts Farmers Market | Metro vs. Albertsons Companies | Metro vs. Kroger Company |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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