Correlation Between NVIDIA and Wheels Up
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Wheels Up 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 Wheels Up into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Wheels Up Experience, you can compare the effects of market volatilities on NVIDIA and Wheels Up 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 Wheels Up. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Wheels Up.
Diversification Opportunities for NVIDIA and Wheels Up
Modest diversification
The 3 months correlation between NVIDIA and Wheels is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Wheels Up Experience in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheels Up Experience 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 Wheels Up. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheels Up Experience has no effect on the direction of NVIDIA i.e., NVIDIA and Wheels Up go up and down completely randomly.
Pair Corralation between NVIDIA and Wheels Up
Given the investment horizon of 90 days NVIDIA is expected to under-perform the Wheels Up. But the stock apears to be less risky and, when comparing its historical volatility, NVIDIA is 2.26 times less risky than Wheels Up. The stock trades about -0.05 of its potential returns per unit of risk. The Wheels Up Experience is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 223.00 in Wheels Up Experience on August 27, 2024 and sell it today you would earn a total of 40.00 from holding Wheels Up Experience or generate 17.94% 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. Wheels Up Experience
Performance |
| Timeline |
| NVIDIA |
| Wheels Up Experience |
NVIDIA and Wheels Up Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Wheels Up
The main advantage of trading using opposite NVIDIA and Wheels Up positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Wheels Up 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 Wheels Up will offset losses from the drop in Wheels Up's long position.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| Wheels Up vs. Blade Air Mobility | Wheels Up vs. Clear Secure | Wheels Up vs. Archer Aviation | Wheels Up vs. Beauty Health Co |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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