Correlation Between INTEL CDR and NVIDIA CDR

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

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

Diversification Opportunities for INTEL CDR and NVIDIA CDR

-0.07

Correlation Coefficient

INTEL CDR  NVIDIA CDR

Good diversification

The 3 months correlation between INTEL and NVIDIA is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding INTEL CDR and NVIDIA CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA CDR and INTEL CDR 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 INTEL 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 INTEL CDR i.e., INTEL CDR and NVIDIA CDR go up and down completely randomly.

Pair Corralation between INTEL CDR and NVIDIA CDR

Assuming the 90 days trading horizon INTEL CDR is expected to generate 1.07 times more return on investment than NVIDIA CDR. However, INTEL CDR is 1.07 times more volatile than NVIDIA CDR. It trades about 0.07 of its potential returns per unit of risk. NVIDIA CDR is currently generating about -0.07 per unit of risk. If you would invest  1,164  in INTEL CDR on December 30, 2024 and sell it today you would earn a total of  159.00  from holding INTEL CDR or generate 13.66% return on investment over 90 days.

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

INTEL CDR  vs.  NVIDIA CDR

INTEL CDR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in INTEL CDR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, INTEL CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

NVIDIA CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days NVIDIA CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with INTEL CDR and NVIDIA CDR

The main advantage of trading using opposite INTEL CDR and NVIDIA CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTEL CDR 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.

The idea behind INTEL CDR and NVIDIA CDR 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.