Correlation Between NVIDIA CDR and CNJ Capital

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

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

Diversification Opportunities for NVIDIA CDR and CNJ Capital

0.0

Correlation Coefficient

NVIDIA CDR  CNJ Capital

Pay attention - limited upside

The 3 months correlation between NVIDIA and CNJ is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA CDR and CNJ Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNJ Capital 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 CNJ Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNJ Capital Investments has no effect on the direction of NVIDIA CDR i.e., NVIDIA CDR and CNJ Capital go up and down completely randomly.

Pair Corralation between NVIDIA CDR and CNJ Capital

If you would invest  3,248  in NVIDIA CDR on October 10, 2024 and sell it today you would earn a total of  28.00  from holding NVIDIA CDR or generate 0.86% return on investment over 90 days.

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

NVIDIA CDR  vs.  CNJ Capital Investments

NVIDIA CDR

Risk-Adjusted Performance

2 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA CDR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, NVIDIA CDR is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

CNJ Capital Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNJ Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, CNJ Capital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with NVIDIA CDR and CNJ Capital

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

The idea behind NVIDIA CDR and CNJ Capital 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.