Correlation Between Las Vegas and NVIDIA Corp

Can any of the company-specific risk be diversified away by investing in both Las Vegas and NVIDIA Corp 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 Las Vegas and NVIDIA Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Las Vegas Sands and NVIDIA Corp, you can compare the effects of market volatilities on Las Vegas and NVIDIA Corp 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 Las Vegas with a short position of NVIDIA Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Las Vegas and NVIDIA Corp.

Diversification Opportunities for Las Vegas and NVIDIA Corp

0.75

Correlation Coefficient

Las Vegas  NVIDIA Corp

Poor diversification

The 3 months correlation between Las and NVIDIA is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Las Vegas Sands and NVIDIA Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA Corp and Las Vegas 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 Las Vegas Sands are associated (or correlated) with NVIDIA Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA Corp has no effect on the direction of Las Vegas i.e., Las Vegas and NVIDIA Corp go up and down completely randomly.

Pair Corralation between Las Vegas and NVIDIA Corp

Assuming the 90 days trading horizon Las Vegas Sands is expected to generate 0.72 times more return on investment than NVIDIA Corp. However, Las Vegas Sands is 1.39 times less risky than NVIDIA Corp. It trades about 0.23 of its potential returns per unit of risk. NVIDIA Corp is currently generating about 0.08 per unit of risk. If you would invest  3,885  in Las Vegas Sands on August 30, 2024 and sell it today you would earn a total of  1,245  from holding Las Vegas Sands or generate 32.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Las Vegas Sands  vs.  NVIDIA Corp

Las Vegas Sands

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Las Vegas Sands are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Las Vegas unveiled solid returns over the last few months and may actually be approaching a breakup point.

NVIDIA Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, NVIDIA Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Las Vegas and NVIDIA Corp

The main advantage of trading using opposite Las Vegas and NVIDIA Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Las Vegas position performs unexpectedly, NVIDIA Corp 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 Corp will offset losses from the drop in NVIDIA Corp's long position.

The idea behind Las Vegas Sands and NVIDIA Corp 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.