Correlation Between NVIDIACDR and Carlin Gold

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

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

Diversification Opportunities for NVIDIACDR and Carlin Gold

0.21

Correlation Coefficient

NVIDIACDR  Carlin Gold

Modest diversification

The 3 months correlation between NVIDIACDR and Carlin is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA CDR and Carlin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlin Gold and NVIDIACDR 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 Carlin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlin Gold has no effect on the direction of NVIDIACDR i.e., NVIDIACDR and Carlin Gold go up and down completely randomly.

Pair Corralation between NVIDIACDR and Carlin Gold

Assuming the 90 days trading horizon NVIDIA CDR is expected to under-perform the Carlin Gold. But the stock apears to be less risky and, when comparing its historical volatility, NVIDIA CDR is 1.75 times less risky than Carlin Gold. The stock trades about -0.03 of its potential returns per unit of risk. The Carlin Gold is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Carlin Gold on December 2, 2024 and sell it today you would earn a total of  3.00  from holding Carlin Gold or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

NVIDIA CDR  vs.  Carlin Gold

NVIDIA CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days NVIDIA CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Carlin Gold

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carlin Gold are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Carlin Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIACDR and Carlin Gold

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

The idea behind NVIDIA CDR and Carlin Gold 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.