Correlation Between NVIDIA and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Singapore Airlines 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 Singapore Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Singapore Airlines, you can compare the effects of market volatilities on NVIDIA and Singapore Airlines 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 Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Singapore Airlines.
Diversification Opportunities for NVIDIA and Singapore Airlines
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NVIDIA and Singapore is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Singapore Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines 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 Singapore Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Airlines has no effect on the direction of NVIDIA i.e., NVIDIA and Singapore Airlines go up and down completely randomly.
Pair Corralation between NVIDIA and Singapore Airlines
Given the investment horizon of 90 days NVIDIA is expected to generate 0.74 times more return on investment than Singapore Airlines. However, NVIDIA is 1.35 times less risky than Singapore Airlines. It trades about 0.13 of its potential returns per unit of risk. Singapore Airlines is currently generating about -0.1 per unit of risk. If you would invest 12,144 in NVIDIA on August 29, 2024 and sell it today you would earn a total of 1,548 from holding NVIDIA or generate 12.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
NVIDIA vs. Singapore Airlines
Performance |
| Timeline |
| NVIDIA |
| Singapore Airlines |
NVIDIA and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Singapore Airlines
The main advantage of trading using opposite NVIDIA and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Singapore Airlines 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 Singapore Airlines will offset losses from the drop in Singapore Airlines' long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Singapore Airlines vs. Finnair Oyj | Singapore Airlines vs. easyJet plc | Singapore Airlines vs. Norse Atlantic ASA | Singapore Airlines vs. Air China Limited |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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