Correlation Between NVIDIA and Esfera Robotics

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

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

Diversification Opportunities for NVIDIA and Esfera Robotics

0.32

Correlation Coefficient

NVIDIA  Esfera Robotics

Weak diversification

The 3 months correlation between NVIDIA and Esfera is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Esfera Robotics R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esfera Robotics R 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 Esfera Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esfera Robotics R has no effect on the direction of NVIDIA i.e., NVIDIA and Esfera Robotics go up and down completely randomly.

Pair Corralation between NVIDIA and Esfera Robotics

Given the investment horizon of 90 days NVIDIA is expected to generate 2.84 times more return on investment than Esfera Robotics. However, NVIDIA is 2.84 times more volatile than Esfera Robotics R. It trades about 0.15 of its potential returns per unit of risk. Esfera Robotics R is currently generating about 0.1 per unit of risk. If you would invest  1,689  in NVIDIA on October 4, 2024 and sell it today you would earn a total of  11,740  from holding NVIDIA or generate 695.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.0%
Values	Daily Returns

NVIDIA  vs.  Esfera Robotics R

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.

Esfera Robotics R

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Esfera Robotics R are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat fragile basic indicators, Esfera Robotics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA and Esfera Robotics

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

The idea behind NVIDIA and Esfera Robotics R 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.