Correlation Between NVIDIA and Newcrest Mining
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Newcrest Mining 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 Newcrest Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Newcrest Mining, you can compare the effects of market volatilities on NVIDIA and Newcrest Mining 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 Newcrest Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Newcrest Mining.
Diversification Opportunities for NVIDIA and Newcrest Mining
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NVIDIA and Newcrest is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Newcrest Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newcrest Mining 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 Newcrest Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newcrest Mining has no effect on the direction of NVIDIA i.e., NVIDIA and Newcrest Mining go up and down completely randomly.
Pair Corralation between NVIDIA and Newcrest Mining
Given the investment horizon of 90 days NVIDIA is expected to generate 1.58 times more return on investment than Newcrest Mining. However, NVIDIA is 1.58 times more volatile than Newcrest Mining. It trades about 0.13 of its potential returns per unit of risk. Newcrest Mining is currently generating about 0.03 per unit of risk. If you would invest 3,850 in NVIDIA on August 31, 2024 and sell it today you would earn a total of 9,975 from holding NVIDIA or generate 259.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 8.56% |
| Values | Daily Returns |
NVIDIA vs. Newcrest Mining
Performance |
| Timeline |
| NVIDIA |
| Newcrest Mining |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
NVIDIA and Newcrest Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Newcrest Mining
The main advantage of trading using opposite NVIDIA and Newcrest Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Newcrest Mining 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 Newcrest Mining will offset losses from the drop in Newcrest Mining's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Newcrest Mining vs. Wesdome Gold Mines | Newcrest Mining vs. Gold Reserve | Newcrest Mining vs. Osisko Gold Ro | Newcrest Mining vs. I 80 Gold Corp |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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