Correlation Between NVIDIA and FIRST NATIONAL

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

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

Diversification Opportunities for NVIDIA and FIRST NATIONAL

0.43

Correlation Coefficient

NVIDIA  FIRST NATIONAL

Very weak diversification

The 3 months correlation between NVIDIA and FIRST is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and FIRST NATIONAL FIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST NATIONAL FIN 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 FIRST NATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST NATIONAL FIN has no effect on the direction of NVIDIA i.e., NVIDIA and FIRST NATIONAL go up and down completely randomly.

Pair Corralation between NVIDIA and FIRST NATIONAL

Given the investment horizon of 90 days NVIDIA is expected to generate 1.12 times more return on investment than FIRST NATIONAL. However, NVIDIA is 1.12 times more volatile than FIRST NATIONAL FIN. It trades about 0.07 of its potential returns per unit of risk. FIRST NATIONAL FIN is currently generating about 0.06 per unit of risk. If you would invest  12,771  in NVIDIA on October 5, 2024 and sell it today you would earn a total of  1,060  from holding NVIDIA or generate 8.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.16%
Values	Daily Returns

NVIDIA  vs.  FIRST NATIONAL FIN

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.

FIRST NATIONAL FIN

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days FIRST NATIONAL FIN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, FIRST NATIONAL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with NVIDIA and FIRST NATIONAL

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

The idea behind NVIDIA and FIRST NATIONAL FIN 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.