Correlation Between NVIDIA and LUMI GRUPPEN

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

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

Diversification Opportunities for NVIDIA and LUMI GRUPPEN

-0.1

Correlation Coefficient

NVIDIA  LUMI GRUPPEN

Good diversification

The 3 months correlation between NVIDIA and LUMI is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and LUMI GRUPPEN AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUMI GRUPPEN AS 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 LUMI GRUPPEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUMI GRUPPEN AS has no effect on the direction of NVIDIA i.e., NVIDIA and LUMI GRUPPEN go up and down completely randomly.

Pair Corralation between NVIDIA and LUMI GRUPPEN

Given the investment horizon of 90 days NVIDIA is expected to under-perform the LUMI GRUPPEN. In addition to that, NVIDIA is 1.48 times more volatile than LUMI GRUPPEN AS. It trades about -0.05 of its total potential returns per unit of risk. LUMI GRUPPEN AS is currently generating about 0.05 per unit of volatility. If you would invest  107.00  in LUMI GRUPPEN AS on December 22, 2024 and sell it today you would earn a total of  7.00  from holding LUMI GRUPPEN AS or generate 6.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

NVIDIA  vs.  LUMI GRUPPEN AS

NVIDIA

Risk-Adjusted Performance

Very Weak

Over the last 90 days NVIDIA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

LUMI GRUPPEN AS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LUMI GRUPPEN AS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, LUMI GRUPPEN may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with NVIDIA and LUMI GRUPPEN

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

The idea behind NVIDIA and LUMI GRUPPEN AS 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.