Correlation Between NVIDIA and Saia
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Saia 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 Saia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Saia Inc, you can compare the effects of market volatilities on NVIDIA and Saia 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 Saia. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Saia.
Diversification Opportunities for NVIDIA and Saia
Poor diversification
The 3 months correlation between NVIDIA and Saia is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Saia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saia Inc 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 Saia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saia Inc has no effect on the direction of NVIDIA i.e., NVIDIA and Saia go up and down completely randomly.
Pair Corralation between NVIDIA and Saia
Given the investment horizon of 90 days NVIDIA is expected to generate 9.85 times less return on investment than Saia. But when comparing it to its historical volatility, NVIDIA is 1.87 times less risky than Saia. It trades about 0.05 of its potential returns per unit of risk. Saia Inc is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 42,989 in Saia Inc on August 23, 2024 and sell it today you would earn a total of 11,930 from holding Saia Inc or generate 27.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. Saia Inc
Performance |
| Timeline |
| NVIDIA |
| Saia Inc |
NVIDIA and Saia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Saia
The main advantage of trading using opposite NVIDIA and Saia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Saia 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 Saia will offset losses from the drop in Saia'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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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