Correlation Between NVIDIA and United Lithium
Can any of the company-specific risk be diversified away by investing in both NVIDIA and United Lithium 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 United Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and United Lithium Corp, you can compare the effects of market volatilities on NVIDIA and United Lithium 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 United Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and United Lithium.
Diversification Opportunities for NVIDIA and United Lithium
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NVIDIA and United is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and United Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Lithium Corp 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 United Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Lithium Corp has no effect on the direction of NVIDIA i.e., NVIDIA and United Lithium go up and down completely randomly.
Pair Corralation between NVIDIA and United Lithium
Given the investment horizon of 90 days NVIDIA is expected to generate 0.26 times more return on investment than United Lithium. However, NVIDIA is 3.83 times less risky than United Lithium. It trades about 0.1 of its potential returns per unit of risk. United Lithium Corp is currently generating about 0.02 per unit of risk. If you would invest 11,758 in NVIDIA on August 29, 2024 and sell it today you would earn a total of 1,934 from holding NVIDIA or generate 16.45% 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. United Lithium Corp
Performance |
| Timeline |
| NVIDIA |
| United Lithium Corp |
NVIDIA and United Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and United Lithium
The main advantage of trading using opposite NVIDIA and United Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, United Lithium 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 United Lithium will offset losses from the drop in United Lithium's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| United Lithium vs. Alpha Copper Corp | United Lithium vs. REDFLEX HOLDINGS LTD | United Lithium vs. Global Helium Corp | United Lithium vs. Ridgestone Mining |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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