Correlation Between NVIDIA and Kongsberg Gruppen
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Kongsberg Gruppen 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 Kongsberg Gruppen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Kongsberg Gruppen ASA, you can compare the effects of market volatilities on NVIDIA and Kongsberg Gruppen 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 Kongsberg Gruppen. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Kongsberg Gruppen.
Diversification Opportunities for NVIDIA and Kongsberg Gruppen
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NVIDIA and Kongsberg is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Kongsberg Gruppen ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kongsberg Gruppen ASA 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 Kongsberg Gruppen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kongsberg Gruppen ASA has no effect on the direction of NVIDIA i.e., NVIDIA and Kongsberg Gruppen go up and down completely randomly.
Pair Corralation between NVIDIA and Kongsberg Gruppen
Given the investment horizon of 90 days NVIDIA is expected to generate 0.79 times more return on investment than Kongsberg Gruppen. However, NVIDIA is 1.27 times less risky than Kongsberg Gruppen. It trades about 0.11 of its potential returns per unit of risk. Kongsberg Gruppen ASA is currently generating about 0.07 per unit of risk. If you would invest 12,144 in NVIDIA on August 30, 2024 and sell it today you would earn a total of 1,390 from holding NVIDIA or generate 11.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 93.18% |
| Values | Daily Returns |
NVIDIA vs. Kongsberg Gruppen ASA
Performance |
| Timeline |
| NVIDIA |
| Kongsberg Gruppen ASA |
NVIDIA and Kongsberg Gruppen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Kongsberg Gruppen
The main advantage of trading using opposite NVIDIA and Kongsberg Gruppen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Kongsberg Gruppen 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 Kongsberg Gruppen will offset losses from the drop in Kongsberg Gruppen's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Kongsberg Gruppen vs. Sturm Ruger | Kongsberg Gruppen vs. Ammo Inc | Kongsberg Gruppen vs. Kratos Defense Security | Kongsberg Gruppen vs. VSE Corporation |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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