Correlation Between NVIDIA and Nutrien
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Nutrien 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 Nutrien into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Nutrien, you can compare the effects of market volatilities on NVIDIA and Nutrien 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 Nutrien. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Nutrien.
Diversification Opportunities for NVIDIA and Nutrien
Weak diversification
The 3 months correlation between NVIDIA and Nutrien is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Nutrien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutrien 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 Nutrien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutrien has no effect on the direction of NVIDIA i.e., NVIDIA and Nutrien go up and down completely randomly.
Pair Corralation between NVIDIA and Nutrien
Given the investment horizon of 90 days NVIDIA is expected to generate 1.74 times more return on investment than Nutrien. However, NVIDIA is 1.74 times more volatile than Nutrien. It trades about 0.15 of its potential returns per unit of risk. Nutrien is currently generating about -0.04 per unit of risk. If you would invest 1,598 in NVIDIA on August 27, 2024 and sell it today you would earn a total of 12,597 from holding NVIDIA or generate 788.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. Nutrien
Performance |
| Timeline |
| NVIDIA |
| Nutrien |
NVIDIA and Nutrien Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Nutrien
The main advantage of trading using opposite NVIDIA and Nutrien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Nutrien 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 Nutrien will offset losses from the drop in Nutrien's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Nutrien vs. CF Industries Holdings | Nutrien vs. Intrepid Potash | Nutrien vs. Corteva | Nutrien vs. ICL Israel Chemicals |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |