Correlation Between NVIDIA and Allianz SE

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

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

Diversification Opportunities for NVIDIA and Allianz SE

-0.31

Correlation Coefficient

NVIDIA  Allianz SE

Very good diversification

The 3 months correlation between NVIDIA and Allianz is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Allianz SE VNA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz SE VNA 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 Allianz SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianz SE VNA has no effect on the direction of NVIDIA i.e., NVIDIA and Allianz SE go up and down completely randomly.

Pair Corralation between NVIDIA and Allianz SE

Given the investment horizon of 90 days NVIDIA is expected to generate 3.55 times more return on investment than Allianz SE. However, NVIDIA is 3.55 times more volatile than Allianz SE VNA. It trades about 0.14 of its potential returns per unit of risk. Allianz SE VNA is currently generating about 0.1 per unit of risk. If you would invest  4,661  in NVIDIA on October 5, 2024 and sell it today you would earn a total of  9,170  from holding NVIDIA or generate 196.74% return on investment over 90 days.

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

NVIDIA  vs.  Allianz SE VNA

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.

Allianz SE VNA

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Allianz SE VNA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Allianz SE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NVIDIA and Allianz SE

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

The idea behind NVIDIA and Allianz SE VNA 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.