Correlation Between NVIDIA CDR and MTY Food

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

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

Diversification Opportunities for NVIDIA CDR and MTY Food

-0.12

Correlation Coefficient

NVIDIA CDR  MTY Food

Good diversification

The 3 months correlation between NVIDIA and MTY is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA CDR and MTY Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTY Food Group 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 MTY Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTY Food Group has no effect on the direction of NVIDIA CDR i.e., NVIDIA CDR and MTY Food go up and down completely randomly.

Pair Corralation between NVIDIA CDR and MTY Food

Assuming the 90 days trading horizon NVIDIA CDR is expected to generate 1.91 times more return on investment than MTY Food. However, NVIDIA CDR is 1.91 times more volatile than MTY Food Group. It trades about 0.03 of its potential returns per unit of risk. MTY Food Group is currently generating about 0.05 per unit of risk. If you would invest  3,184  in NVIDIA CDR on October 8, 2024 and sell it today you would earn a total of  188.00  from holding NVIDIA CDR or generate 5.9% return on investment over 90 days.

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

NVIDIA CDR  vs.  MTY Food Group

NVIDIA CDR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA CDR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, NVIDIA CDR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

MTY Food Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MTY Food Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, MTY Food is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with NVIDIA CDR and MTY Food

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

The idea behind NVIDIA CDR and MTY Food Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.