Correlation Between NVIDIA and Option Care

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

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

Diversification Opportunities for NVIDIA and Option Care

-0.55

Correlation Coefficient

NVIDIA  Option Care

Excellent diversification

The 3 months correlation between NVIDIA and Option is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Option Care Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Option Care 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 Option Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Option Care Health has no effect on the direction of NVIDIA i.e., NVIDIA and Option Care go up and down completely randomly.

Pair Corralation between NVIDIA and Option Care

Assuming the 90 days trading horizon NVIDIA is expected to under-perform the Option Care. In addition to that, NVIDIA is 1.48 times more volatile than Option Care Health. It trades about -0.06 of its total potential returns per unit of risk. Option Care Health is currently generating about 0.24 per unit of volatility. If you would invest  2,200  in Option Care Health on December 22, 2024 and sell it today you would earn a total of  940.00  from holding Option Care Health or generate 42.73% return on investment over 90 days.

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

NVIDIA  vs.  Option Care 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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Option Care Health

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Option Care Health are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Option Care reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA and Option Care

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

The idea behind NVIDIA and Option Care 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..