Correlation Between NVIDIA CDR and Keg Royalties

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

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

Diversification Opportunities for NVIDIA CDR and Keg Royalties

0.82

Correlation Coefficient

NVIDIA CDR  Keg Royalties

Very poor diversification

The 3 months correlation between NVIDIA and Keg is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA CDR and The Keg Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keg Royalties 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 Keg Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keg Royalties has no effect on the direction of NVIDIA CDR i.e., NVIDIA CDR and Keg Royalties go up and down completely randomly.

Pair Corralation between NVIDIA CDR and Keg Royalties

Assuming the 90 days trading horizon NVIDIA CDR is expected to under-perform the Keg Royalties. In addition to that, NVIDIA CDR is 3.58 times more volatile than The Keg Royalties. It trades about -0.07 of its total potential returns per unit of risk. The Keg Royalties is currently generating about -0.1 per unit of volatility. If you would invest  1,478  in The Keg Royalties on December 30, 2024 and sell it today you would lose (110.00) from holding The Keg Royalties or give up 7.44% of portfolio value over 90 days.

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

NVIDIA CDR  vs.  The Keg Royalties

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 abnormal performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Keg Royalties

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Keg Royalties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with NVIDIA CDR and Keg Royalties

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

The idea behind NVIDIA CDR and The Keg Royalties 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.