Correlation Between NVIDIA and Telecom Argentina
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Telecom Argentina 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 Telecom Argentina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Telecom Argentina SA, you can compare the effects of market volatilities on NVIDIA and Telecom Argentina 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 Telecom Argentina. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Telecom Argentina.
Diversification Opportunities for NVIDIA and Telecom Argentina
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NVIDIA and Telecom is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Telecom Argentina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Argentina 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 Telecom Argentina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Argentina has no effect on the direction of NVIDIA i.e., NVIDIA and Telecom Argentina go up and down completely randomly.
Pair Corralation between NVIDIA and Telecom Argentina
Given the investment horizon of 90 days NVIDIA is expected to generate 1.47 times more return on investment than Telecom Argentina. However, NVIDIA is 1.47 times more volatile than Telecom Argentina SA. It trades about 0.03 of its potential returns per unit of risk. Telecom Argentina SA is currently generating about -0.1 per unit of risk. If you would invest 13,771 in NVIDIA on November 18, 2024 and sell it today you would earn a total of 114.00 from holding NVIDIA or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. Telecom Argentina SA
Performance |
| Timeline |
| NVIDIA |
| Telecom Argentina |
NVIDIA and Telecom Argentina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Telecom Argentina
The main advantage of trading using opposite NVIDIA and Telecom Argentina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Telecom Argentina 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 Telecom Argentina will offset losses from the drop in Telecom Argentina's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Telecom Argentina vs. Telefonica SA ADR | Telecom Argentina vs. SK Telecom Co | Telecom Argentina vs. America Movil SAB | Telecom Argentina vs. KT Corporation |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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