Correlation Between NVIDIA and Santos
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Santos 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 Santos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Santos, you can compare the effects of market volatilities on NVIDIA and Santos 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 Santos. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Santos.
Diversification Opportunities for NVIDIA and Santos
Excellent diversification
The 3 months correlation between NVIDIA and Santos is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Santos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santos 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 Santos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santos has no effect on the direction of NVIDIA i.e., NVIDIA and Santos go up and down completely randomly.
Pair Corralation between NVIDIA and Santos
Given the investment horizon of 90 days NVIDIA is expected to generate 1.1 times more return on investment than Santos. However, NVIDIA is 1.1 times more volatile than Santos. It trades about 0.06 of its potential returns per unit of risk. Santos is currently generating about -0.01 per unit of risk. If you would invest 11,498 in NVIDIA on September 1, 2024 and sell it today you would earn a total of 2,327 from holding NVIDIA or generate 20.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.62% |
| Values | Daily Returns |
NVIDIA vs. Santos
Performance |
| Timeline |
| NVIDIA |
| Santos |
NVIDIA and Santos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Santos
The main advantage of trading using opposite NVIDIA and Santos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Santos 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 Santos will offset losses from the drop in Santos' long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Santos vs. Permian Resources | Santos vs. Devon Energy | Santos vs. EOG Resources | Santos vs. Coterra Energy |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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