Correlation Between NVIDIACDR and Lundin Gold

Can any of the company-specific risk be diversified away by investing in both NVIDIACDR and Lundin 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 Lundin 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 Lundin Gold, you can compare the effects of market volatilities on NVIDIACDR and Lundin 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 Lundin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIACDR and Lundin Gold.

Diversification Opportunities for NVIDIACDR and Lundin Gold

-0.51

Correlation Coefficient

NVIDIACDR  Lundin Gold

Excellent diversification

The 3 months correlation between NVIDIACDR and Lundin is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA CDR and Lundin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin 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 Lundin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Gold has no effect on the direction of NVIDIACDR i.e., NVIDIACDR and Lundin Gold go up and down completely randomly.

Pair Corralation between NVIDIACDR and Lundin Gold

Assuming the 90 days trading horizon NVIDIA CDR is expected to under-perform the Lundin Gold. In addition to that, NVIDIACDR is 1.68 times more volatile than Lundin Gold. It trades about -0.04 of its total potential returns per unit of risk. Lundin Gold is currently generating about 0.19 per unit of volatility. If you would invest  3,256  in Lundin Gold on November 29, 2024 and sell it today you would earn a total of  912.00  from holding Lundin Gold or generate 28.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

NVIDIA CDR  vs.  Lundin 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 unfluctuating 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.

Lundin Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lundin Gold are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Lundin Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIACDR and Lundin Gold

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

The idea behind NVIDIA CDR and Lundin 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.