Correlation Between NVIDIA and Phibro Animal

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

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

Diversification Opportunities for NVIDIA and Phibro Animal

0.03

Correlation Coefficient

NVIDIA  Phibro Animal

Significant diversification

The 3 months correlation between NVIDIA and Phibro is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Phibro Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phibro Animal Health and NVIDIA 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 NVIDIA are associated (or correlated) with Phibro Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phibro Animal Health has no effect on the direction of NVIDIA i.e., NVIDIA and Phibro Animal go up and down completely randomly.

Pair Corralation between NVIDIA and Phibro Animal

Assuming the 90 days trading horizon NVIDIA is expected to under-perform the Phibro Animal. In addition to that, NVIDIA is 1.28 times more volatile than Phibro Animal Health. It trades about -0.06 of its total potential returns per unit of risk. Phibro Animal Health is currently generating about -0.01 per unit of volatility. If you would invest  2,050  in Phibro Animal Health on December 22, 2024 and sell it today you would lose (80.00) from holding Phibro Animal Health or give up 3.9% of portfolio value over 90 days.

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

NVIDIA  vs.  Phibro Animal Health

NVIDIA

Risk-Adjusted Performance

Very Weak

Over the last 90 days NVIDIA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Phibro Animal Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Phibro Animal Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Phibro Animal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NVIDIA and Phibro Animal

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

The idea behind NVIDIA and Phibro Animal Health 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.