Correlation Between NVIDIA and Ab Value

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

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

Diversification Opportunities for NVIDIA and Ab Value

0.58

Correlation Coefficient

NVIDIA  Ab Value

Very weak diversification

The 3 months correlation between NVIDIA and ABVAX is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Ab Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Value Fund 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 Ab Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Value Fund has no effect on the direction of NVIDIA i.e., NVIDIA and Ab Value go up and down completely randomly.

Pair Corralation between NVIDIA and Ab Value

Given the investment horizon of 90 days NVIDIA is expected to generate 1.42 times more return on investment than Ab Value. However, NVIDIA is 1.42 times more volatile than Ab Value Fund. It trades about 0.08 of its potential returns per unit of risk. Ab Value Fund is currently generating about -0.11 per unit of risk. If you would invest  12,491  in NVIDIA on October 4, 2024 and sell it today you would earn a total of  1,340  from holding NVIDIA or generate 10.73% return on investment over 90 days.

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

NVIDIA  vs.  Ab Value Fund

NVIDIA

Risk-Adjusted Performance

6 of 100

Modest

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 weak fundamental indicators, NVIDIA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ab Value Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Value Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with NVIDIA and Ab Value

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

The idea behind NVIDIA and Ab Value Fund 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.