Correlation Between NVIDIA and FnGuide

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

By analyzing existing cross correlation between NVIDIA and FnGuide, you can compare the effects of market volatilities on NVIDIA and FnGuide 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 with a short position of FnGuide. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and FnGuide.

Diversification Opportunities for NVIDIA and FnGuide

-0.66

Correlation Coefficient

NVIDIA  FnGuide

Excellent diversification

The 3 months correlation between NVIDIA and FnGuide is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and FnGuide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FnGuide and NVIDIA 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 are associated (or correlated) with FnGuide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FnGuide has no effect on the direction of NVIDIA i.e., NVIDIA and FnGuide go up and down completely randomly.

Pair Corralation between NVIDIA and FnGuide

Given the investment horizon of 90 days NVIDIA is expected to generate 0.8 times more return on investment than FnGuide. However, NVIDIA is 1.25 times less risky than FnGuide. It trades about -0.02 of its potential returns per unit of risk. FnGuide is currently generating about -0.08 per unit of risk. If you would invest  14,025  in NVIDIA on October 4, 2024 and sell it today you would lose (194.00) from holding NVIDIA or give up 1.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

NVIDIA  vs.  FnGuide

NVIDIA

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, NVIDIA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

FnGuide

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FnGuide has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with NVIDIA and FnGuide

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

The idea behind NVIDIA and FnGuide 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 Transaction History module to view history of all your transactions and understand their impact on performance.