Correlation Between NVIDIA and CTP NV

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

By analyzing existing cross correlation between NVIDIA and CTP NV EO, you can compare the effects of market volatilities on NVIDIA and CTP NV 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 CTP NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and CTP NV.

Diversification Opportunities for NVIDIA and CTP NV

-0.14

Correlation Coefficient

NVIDIA  CTP NV

Good diversification

The 3 months correlation between NVIDIA and CTP is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and CTP NV EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTP NV EO 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 CTP NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTP NV EO has no effect on the direction of NVIDIA i.e., NVIDIA and CTP NV go up and down completely randomly.

Pair Corralation between NVIDIA and CTP NV

Assuming the 90 days trading horizon NVIDIA is expected to generate 1.65 times more return on investment than CTP NV. However, NVIDIA is 1.65 times more volatile than CTP NV EO. It trades about 0.14 of its potential returns per unit of risk. CTP NV EO is currently generating about 0.2 per unit of risk. If you would invest  13,116  in NVIDIA on October 26, 2024 and sell it today you would earn a total of  906.00  from holding NVIDIA or generate 6.91% return on investment over 90 days.

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

NVIDIA  vs.  CTP NV EO

NVIDIA

Risk-Adjusted Performance

5 of 100

Modest

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

CTP NV EO

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NVIDIA and CTP NV

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

The idea behind NVIDIA and CTP NV EO 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.

Check out your portfolio center.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.