Correlation Between NVIDIA CDR and RioCan Real

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

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

Diversification Opportunities for NVIDIA CDR and RioCan Real

0.2

Correlation Coefficient

NVIDIA CDR  RioCan Real

Modest diversification

The 3 months correlation between NVIDIA and RioCan is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA CDR and RioCan Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RioCan Real Estate 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 RioCan Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RioCan Real Estate has no effect on the direction of NVIDIA CDR i.e., NVIDIA CDR and RioCan Real go up and down completely randomly.

Pair Corralation between NVIDIA CDR and RioCan Real

Assuming the 90 days trading horizon NVIDIA CDR is expected to under-perform the RioCan Real. In addition to that, NVIDIA CDR is 2.97 times more volatile than RioCan Real Estate. It trades about -0.02 of its total potential returns per unit of risk. RioCan Real Estate is currently generating about 0.01 per unit of volatility. If you would invest  1,873  in RioCan Real Estate on November 20, 2024 and sell it today you would earn a total of  4.00  from holding RioCan Real Estate or generate 0.21% return on investment over 90 days.

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

NVIDIA CDR  vs.  RioCan Real Estate

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 rather sound technical and fundamental indicators, NVIDIA CDR is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

RioCan Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days RioCan Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, RioCan Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NVIDIA CDR and RioCan Real

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

The idea behind NVIDIA CDR and RioCan Real Estate 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.