Correlation Between Exxon and NVIDIA CDR
Can any of the company-specific risk be diversified away by investing in both Exxon and NVIDIA CDR 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 Exxon and NVIDIA CDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EXXON MOBIL CDR and NVIDIA CDR, you can compare the effects of market volatilities on Exxon and NVIDIA CDR 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 Exxon with a short position of NVIDIA CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and NVIDIA CDR.
Diversification Opportunities for Exxon and NVIDIA CDR
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Exxon and NVIDIA is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding EXXON MOBIL CDR and NVIDIA CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA CDR and Exxon 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 EXXON MOBIL CDR are associated (or correlated) with NVIDIA CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA CDR has no effect on the direction of Exxon i.e., Exxon and NVIDIA CDR go up and down completely randomly.
Pair Corralation between Exxon and NVIDIA CDR
Assuming the 90 days trading horizon Exxon is expected to generate 2.07 times less return on investment than NVIDIA CDR. In addition to that, Exxon is 1.91 times more volatile than NVIDIA CDR. It trades about 0.04 of its total potential returns per unit of risk. NVIDIA CDR is currently generating about 0.15 per unit of volatility. If you would invest 1,111 in NVIDIA CDR on August 26, 2024 and sell it today you would earn a total of 2,212 from holding NVIDIA CDR or generate 199.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
EXXON MOBIL CDR vs. NVIDIA CDR
Performance |
| Timeline |
| EXXON MOBIL CDR |
| NVIDIA CDR |
Exxon and NVIDIA CDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and NVIDIA CDR
The main advantage of trading using opposite Exxon and NVIDIA CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, NVIDIA CDR 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 NVIDIA CDR will offset losses from the drop in NVIDIA CDR's long position.| Exxon vs. US Financial 15 | Exxon vs. Cogeco Communications | Exxon vs. Everyday People Financial | Exxon vs. Advent Wireless |
| NVIDIA CDR vs. Metalero Mining Corp | NVIDIA CDR vs. Canso Select Opportunities | NVIDIA CDR vs. Marimaca Copper Corp | NVIDIA CDR vs. NeXGold Mining Corp |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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