Correlation Between NVIDIA CDR and Marimaca Copper

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

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

Diversification Opportunities for NVIDIA CDR and Marimaca Copper

0.77

Correlation Coefficient

NVIDIA CDR  Marimaca Copper

Poor diversification

The 3 months correlation between NVIDIA and Marimaca is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA CDR and Marimaca Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marimaca Copper Corp 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 Marimaca Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marimaca Copper Corp has no effect on the direction of NVIDIA CDR i.e., NVIDIA CDR and Marimaca Copper go up and down completely randomly.

Pair Corralation between NVIDIA CDR and Marimaca Copper

Assuming the 90 days trading horizon NVIDIA CDR is expected to generate 0.86 times more return on investment than Marimaca Copper. However, NVIDIA CDR is 1.16 times less risky than Marimaca Copper. It trades about 0.18 of its potential returns per unit of risk. Marimaca Copper Corp is currently generating about 0.14 per unit of risk. If you would invest  2,498  in NVIDIA CDR on September 4, 2024 and sell it today you would earn a total of  743.00  from holding NVIDIA CDR or generate 29.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

NVIDIA CDR  vs.  Marimaca Copper Corp

NVIDIA CDR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA CDR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, NVIDIA CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Marimaca Copper Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marimaca Copper Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Marimaca Copper displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA CDR and Marimaca Copper

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

The idea behind NVIDIA CDR and Marimaca Copper Corp 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.