Correlation Between NVIDIA and Telenor ASA
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Telenor ASA 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 Telenor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Telenor ASA, you can compare the effects of market volatilities on NVIDIA and Telenor ASA 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 Telenor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Telenor ASA.
Diversification Opportunities for NVIDIA and Telenor ASA
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NVIDIA and Telenor is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Telenor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telenor ASA 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 Telenor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telenor ASA has no effect on the direction of NVIDIA i.e., NVIDIA and Telenor ASA go up and down completely randomly.
Pair Corralation between NVIDIA and Telenor ASA
Given the investment horizon of 90 days NVIDIA is expected to generate 1.83 times more return on investment than Telenor ASA. However, NVIDIA is 1.83 times more volatile than Telenor ASA. It trades about 0.09 of its potential returns per unit of risk. Telenor ASA is currently generating about -0.22 per unit of risk. If you would invest 13,276 in NVIDIA on September 1, 2024 and sell it today you would earn a total of 549.00 from holding NVIDIA or generate 4.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. Telenor ASA
Performance |
| Timeline |
| NVIDIA |
| Telenor ASA |
NVIDIA and Telenor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Telenor ASA
The main advantage of trading using opposite NVIDIA and Telenor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Telenor ASA 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 Telenor ASA will offset losses from the drop in Telenor ASA's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Telenor ASA vs. Orange SA ADR | Telenor ASA vs. ATT Inc | Telenor ASA vs. Verizon Communications | Telenor ASA vs. MTN Group Ltd |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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