Correlation Between NVIDIA and LODESTAR MIN

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

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

Diversification Opportunities for NVIDIA and LODESTAR MIN

-0.03

Correlation Coefficient

NVIDIA  LODESTAR MIN

Good diversification

The 3 months correlation between NVIDIA and LODESTAR is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and LODESTAR MIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LODESTAR MIN 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 LODESTAR MIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LODESTAR MIN has no effect on the direction of NVIDIA i.e., NVIDIA and LODESTAR MIN go up and down completely randomly.

Pair Corralation between NVIDIA and LODESTAR MIN

Given the investment horizon of 90 days NVIDIA is expected to generate 4.13 times less return on investment than LODESTAR MIN. But when comparing it to its historical volatility, NVIDIA is 14.08 times less risky than LODESTAR MIN. It trades about 0.15 of its potential returns per unit of risk. LODESTAR MIN is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.69  in LODESTAR MIN on October 5, 2024 and sell it today you would earn a total of  8.08  from holding LODESTAR MIN or generate 1171.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.8%
Values	Daily Returns

NVIDIA  vs.  LODESTAR MIN

NVIDIA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 5 (%) 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.

LODESTAR MIN

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days LODESTAR MIN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather uncertain forward-looking indicators, LODESTAR MIN exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA and LODESTAR MIN

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

The idea behind NVIDIA and LODESTAR MIN 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.