Correlation Between NVIDIA CDR and Montage Gold

Can any of the company-specific risk be diversified away by investing in both NVIDIA CDR and Montage 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 NVIDIA CDR and Montage 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 Montage Gold Corp, you can compare the effects of market volatilities on NVIDIA CDR and Montage 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 NVIDIA CDR with a short position of Montage Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA CDR and Montage Gold.

Diversification Opportunities for NVIDIA CDR and Montage Gold

-0.49

Correlation Coefficient

NVIDIA CDR  Montage Gold

Very good diversification

The 3 months correlation between NVIDIA and Montage is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA CDR and Montage Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montage Gold 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 Montage Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montage Gold Corp has no effect on the direction of NVIDIA CDR i.e., NVIDIA CDR and Montage Gold go up and down completely randomly.

Pair Corralation between NVIDIA CDR and Montage Gold

Assuming the 90 days trading horizon NVIDIA CDR is expected to under-perform the Montage Gold. In addition to that, NVIDIA CDR is 1.28 times more volatile than Montage Gold Corp. It trades about -0.07 of its total potential returns per unit of risk. Montage Gold Corp is currently generating about 0.22 per unit of volatility. If you would invest  209.00  in Montage Gold Corp on December 30, 2024 and sell it today you would earn a total of  110.00  from holding Montage Gold Corp or generate 52.63% return on investment over 90 days.

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

NVIDIA CDR  vs.  Montage Gold Corp

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.

Montage Gold Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Montage Gold Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Montage Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA CDR and Montage Gold

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

The idea behind NVIDIA CDR and Montage Gold 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.