Correlation Between ISign Media and NVIDIA CDR

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

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

Diversification Opportunities for ISign Media and NVIDIA CDR

0.02

Correlation Coefficient

ISign Media  NVIDIA CDR

Significant diversification

The 3 months correlation between ISign and NVIDIA is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding iSign Media Solutions and NVIDIA CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA CDR and ISign Media 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 iSign Media Solutions 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 ISign Media i.e., ISign Media and NVIDIA CDR go up and down completely randomly.

Pair Corralation between ISign Media and NVIDIA CDR

Assuming the 90 days horizon iSign Media Solutions is expected to generate 15.13 times more return on investment than NVIDIA CDR. However, ISign Media is 15.13 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 0.16 per unit of risk. If you would invest  1.00  in iSign Media Solutions on October 9, 2024 and sell it today you would earn a total of  1,374  from holding iSign Media Solutions or generate 137400.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

iSign Media Solutions  vs.  NVIDIA CDR

iSign Media Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iSign Media Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ISign Media is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

NVIDIA CDR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA CDR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, NVIDIA CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ISign Media and NVIDIA CDR

The main advantage of trading using opposite ISign Media and NVIDIA CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ISign Media 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 iSign Media Solutions 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.