Correlation Between NVIDIA and Muenchener Rueckver
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Muenchener Rueckver 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 Muenchener Rueckver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Muenchener Rueckver Ges, you can compare the effects of market volatilities on NVIDIA and Muenchener Rueckver 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 Muenchener Rueckver. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Muenchener Rueckver.
Diversification Opportunities for NVIDIA and Muenchener Rueckver
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NVIDIA and Muenchener is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Muenchener Rueckver Ges in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muenchener Rueckver Ges 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 Muenchener Rueckver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muenchener Rueckver Ges has no effect on the direction of NVIDIA i.e., NVIDIA and Muenchener Rueckver go up and down completely randomly.
Pair Corralation between NVIDIA and Muenchener Rueckver
Given the investment horizon of 90 days NVIDIA is expected to under-perform the Muenchener Rueckver. In addition to that, NVIDIA is 2.27 times more volatile than Muenchener Rueckver Ges. It trades about -0.05 of its total potential returns per unit of risk. Muenchener Rueckver Ges is currently generating about -0.09 per unit of volatility. If you would invest 1,031 in Muenchener Rueckver Ges on August 28, 2024 and sell it today you would lose (24.00) from holding Muenchener Rueckver Ges or give up 2.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. Muenchener Rueckver Ges
Performance |
| Timeline |
| NVIDIA |
| Muenchener Rueckver Ges |
NVIDIA and Muenchener Rueckver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Muenchener Rueckver
The main advantage of trading using opposite NVIDIA and Muenchener Rueckver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Muenchener Rueckver 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 Muenchener Rueckver will offset losses from the drop in Muenchener Rueckver's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Muenchener Rueckver vs. Swiss Re AG | Muenchener Rueckver vs. SiriusPoint | Muenchener Rueckver vs. Renaissancere Holdings | Muenchener Rueckver vs. Maiden Holdings |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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