Correlation Between NVIDIA and ProShares
Can any of the company-specific risk be diversified away by investing in both NVIDIA and ProShares 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 ProShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and ProShares SP 500, you can compare the effects of market volatilities on NVIDIA and ProShares 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 ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and ProShares.
Diversification Opportunities for NVIDIA and ProShares
Very weak diversification
The 3 months correlation between NVIDIA and ProShares is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and ProShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP 500 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 ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP 500 has no effect on the direction of NVIDIA i.e., NVIDIA and ProShares go up and down completely randomly.
Pair Corralation between NVIDIA and ProShares
Given the investment horizon of 90 days NVIDIA is expected to generate 5.07 times more return on investment than ProShares. However, NVIDIA is 5.07 times more volatile than ProShares SP 500. It trades about 0.15 of its potential returns per unit of risk. ProShares SP 500 is currently generating about 0.12 per unit of risk. If you would invest 4,781 in NVIDIA on August 24, 2024 and sell it today you would earn a total of 9,886 from holding NVIDIA or generate 206.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
NVIDIA vs. ProShares SP 500
Performance |
| Timeline |
| NVIDIA |
| ProShares SP 500 |
NVIDIA and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and ProShares
The main advantage of trading using opposite NVIDIA and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, ProShares 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 ProShares will offset losses from the drop in ProShares' long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| ProShares vs. Vanguard Russell 1000 | ProShares vs. Vanguard Russell 2000 | ProShares vs. Vanguard Russell 3000 | ProShares vs. Vanguard Russell 2000 |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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