Correlation Between NVIDIA CDR and Brookfield Investments

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

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

Diversification Opportunities for NVIDIA CDR and Brookfield Investments

0.28

Correlation Coefficient

NVIDIA CDR  Brookfield Investments

Modest diversification

The 3 months correlation between NVIDIA and Brookfield is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA CDR and Brookfield Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Investments and NVIDIA 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 NVIDIA CDR are associated (or correlated) with Brookfield Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Investments has no effect on the direction of NVIDIA CDR i.e., NVIDIA CDR and Brookfield Investments go up and down completely randomly.

Pair Corralation between NVIDIA CDR and Brookfield Investments

Assuming the 90 days trading horizon NVIDIA CDR is expected to generate 5.29 times more return on investment than Brookfield Investments. However, NVIDIA CDR is 5.29 times more volatile than Brookfield Investments. It trades about 0.18 of its potential returns per unit of risk. Brookfield Investments is currently generating about 0.05 per unit of risk. If you would invest  2,498  in NVIDIA CDR on September 4, 2024 and sell it today you would earn a total of  743.00  from holding NVIDIA CDR or generate 29.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	53.13%
Values	Daily Returns

NVIDIA CDR  vs.  Brookfield Investments

NVIDIA CDR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA CDR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, NVIDIA CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Brookfield Investments

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Investments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Brookfield Investments is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NVIDIA CDR and Brookfield Investments

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

The idea behind NVIDIA CDR and Brookfield Investments 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.