Correlation Between NVIDIA and Baumer SA
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Baumer 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 Baumer SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Baumer SA, you can compare the effects of market volatilities on NVIDIA and Baumer 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 Baumer SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Baumer SA.
Diversification Opportunities for NVIDIA and Baumer SA
Excellent diversification
The 3 months correlation between NVIDIA and Baumer is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Baumer SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baumer 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 Baumer SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baumer SA has no effect on the direction of NVIDIA i.e., NVIDIA and Baumer SA go up and down completely randomly.
Pair Corralation between NVIDIA and Baumer SA
Assuming the 90 days trading horizon NVIDIA is expected to generate 1.77 times more return on investment than Baumer SA. However, NVIDIA is 1.77 times more volatile than Baumer SA. It trades about 0.2 of its potential returns per unit of risk. Baumer SA is currently generating about -0.02 per unit of risk. If you would invest 1,375 in NVIDIA on August 30, 2024 and sell it today you would earn a total of 303.00 from holding NVIDIA or generate 22.04% 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. Baumer SA
Performance |
| Timeline |
| NVIDIA |
| Baumer SA |
NVIDIA and Baumer SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and Baumer SA
The main advantage of trading using opposite NVIDIA and Baumer SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Baumer 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 Baumer SA will offset losses from the drop in Baumer SA's long position.The idea behind NVIDIA and Baumer SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Baumer SA vs. Baumer SA | Baumer SA vs. Biomm SA | Baumer SA vs. Bardella SA Indstrias | Baumer SA vs. Banco Alfa de |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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