Correlation Between NVIDIA and Tenaris SA
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Tenaris SA 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 Tenaris SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Tenaris SA, you can compare the effects of market volatilities on NVIDIA and Tenaris SA 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 Tenaris SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Tenaris SA.
Diversification Opportunities for NVIDIA and Tenaris SA
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NVIDIA and Tenaris is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Tenaris SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenaris SA 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 Tenaris SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenaris SA has no effect on the direction of NVIDIA i.e., NVIDIA and Tenaris SA go up and down completely randomly.
Pair Corralation between NVIDIA and Tenaris SA
Given the investment horizon of 90 days NVIDIA is expected to generate 2.02 times more return on investment than Tenaris SA. However, NVIDIA is 2.02 times more volatile than Tenaris SA. It trades about 0.08 of its potential returns per unit of risk. Tenaris SA is currently generating about 0.01 per unit of risk. If you would invest 11,388 in NVIDIA on August 24, 2024 and sell it today you would earn a total of 3,279 from holding NVIDIA or generate 28.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.6% |
| Values | Daily Returns |
NVIDIA vs. Tenaris SA
Performance |
| Timeline |
| NVIDIA |
| Tenaris SA |
NVIDIA and Tenaris SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Tenaris SA
The main advantage of trading using opposite NVIDIA and Tenaris SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Tenaris SA 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 Tenaris SA will offset losses from the drop in Tenaris SA's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Tenaris SA vs. Baker Hughes Co | Tenaris SA vs. Tenaris SA ADR | Tenaris SA vs. TechnipFMC PLC | Tenaris SA vs. NOV Inc |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |