Correlation Between NVIDIA and Oxford Bank
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Oxford Bank 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 Oxford Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Oxford Bank, you can compare the effects of market volatilities on NVIDIA and Oxford Bank 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 Oxford Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Oxford Bank.
Diversification Opportunities for NVIDIA and Oxford Bank
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NVIDIA and Oxford is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Oxford Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Bank 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 Oxford Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Bank has no effect on the direction of NVIDIA i.e., NVIDIA and Oxford Bank go up and down completely randomly.
Pair Corralation between NVIDIA and Oxford Bank
Given the investment horizon of 90 days NVIDIA is expected to generate 4.11 times more return on investment than Oxford Bank. However, NVIDIA is 4.11 times more volatile than Oxford Bank. It trades about 0.13 of its potential returns per unit of risk. Oxford Bank is currently generating about 0.12 per unit of risk. If you would invest 12,140 in NVIDIA on August 28, 2024 and sell it today you would earn a total of 1,552 from holding NVIDIA or generate 12.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. Oxford Bank
Performance |
| Timeline |
| NVIDIA |
| Oxford Bank |
NVIDIA and Oxford Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Oxford Bank
The main advantage of trading using opposite NVIDIA and Oxford Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Oxford Bank 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 Oxford Bank will offset losses from the drop in Oxford Bank's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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