Correlation Between NVIDIACDR and Killam Apartment

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

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

Diversification Opportunities for NVIDIACDR and Killam Apartment

0.44

Correlation Coefficient

NVIDIACDR  Killam Apartment

Very weak diversification

The 3 months correlation between NVIDIACDR and Killam is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA CDR and Killam Apartment Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Killam Apartment Real 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 Killam Apartment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Killam Apartment Real has no effect on the direction of NVIDIACDR i.e., NVIDIACDR and Killam Apartment go up and down completely randomly.

Pair Corralation between NVIDIACDR and Killam Apartment

Assuming the 90 days trading horizon NVIDIA CDR is expected to generate 2.66 times more return on investment than Killam Apartment. However, NVIDIACDR is 2.66 times more volatile than Killam Apartment Real. It trades about 0.12 of its potential returns per unit of risk. Killam Apartment Real is currently generating about 0.01 per unit of risk. If you would invest  552.00  in NVIDIA CDR on December 2, 2024 and sell it today you would earn a total of  2,343  from holding NVIDIA CDR or generate 424.46% return on investment over 90 days.

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

NVIDIA CDR  vs.  Killam Apartment Real

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.

Killam Apartment Real

Risk-Adjusted Performance

Very Weak

Over the last 90 days Killam Apartment Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic 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 NVIDIACDR and Killam Apartment

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

The idea behind NVIDIA CDR and Killam Apartment Real 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.