Correlation Between BrainChip Holdings and NVE

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

By analyzing existing cross correlation between BrainChip Holdings and NVE Corporation, you can compare the effects of market volatilities on BrainChip Holdings and NVE 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 BrainChip Holdings with a short position of NVE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BrainChip Holdings and NVE.

Diversification Opportunities for BrainChip Holdings and NVE

0.44

Correlation Coefficient

BrainChip Holdings  NVE

Very weak diversification

The 3 months correlation between BrainChip and NVE is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding BrainChip Holdings and NVE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVE Corporation and BrainChip Holdings 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 BrainChip Holdings are associated (or correlated) with NVE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVE Corporation has no effect on the direction of BrainChip Holdings i.e., BrainChip Holdings and NVE go up and down completely randomly.

Pair Corralation between BrainChip Holdings and NVE

Assuming the 90 days horizon BrainChip Holdings is expected to generate 3.01 times more return on investment than NVE. However, BrainChip Holdings is 3.01 times more volatile than NVE Corporation. It trades about 0.02 of its potential returns per unit of risk. NVE Corporation is currently generating about 0.03 per unit of risk. If you would invest  47.00  in BrainChip Holdings on October 5, 2024 and sell it today you would lose (22.00) from holding BrainChip Holdings or give up 46.81% of portfolio value over 90 days.

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

BrainChip Holdings  vs.  NVE Corp.

BrainChip Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BrainChip Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical indicators, BrainChip Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

NVE Corporation

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NVE Corporation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, NVE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BrainChip Holdings and NVE

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

The idea behind BrainChip Holdings and NVE Corporation 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.