Correlation Between NVIDIA and Northern Star
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Northern Star 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 Northern Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Northern Star Resources, you can compare the effects of market volatilities on NVIDIA and Northern Star 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 Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Northern Star.
Diversification Opportunities for NVIDIA and Northern Star
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between NVIDIA and Northern is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Northern Star Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Star Resources 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 Northern Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Star Resources has no effect on the direction of NVIDIA i.e., NVIDIA and Northern Star go up and down completely randomly.
Pair Corralation between NVIDIA and Northern Star
Given the investment horizon of 90 days NVIDIA is expected to generate 1.98 times less return on investment than Northern Star. In addition to that, NVIDIA is 3.13 times more volatile than Northern Star Resources. It trades about 0.03 of its total potential returns per unit of risk. Northern Star Resources is currently generating about 0.21 per unit of volatility. If you would invest 1,041 in Northern Star Resources on November 18, 2024 and sell it today you would earn a total of 76.00 from holding Northern Star Resources or generate 7.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
NVIDIA vs. Northern Star Resources
Performance |
| Timeline |
| NVIDIA |
| Northern Star Resources |
NVIDIA and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Northern Star
The main advantage of trading using opposite NVIDIA and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Northern Star 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 Northern Star will offset losses from the drop in Northern Star's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Northern Star vs. ZIJIN MINH UNSPADR20 | Northern Star vs. Newmont | Northern Star vs. Barrick Gold | Northern Star vs. Franco Nevada |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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