Correlation Between NVIDIA and CH Robinson

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

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

Diversification Opportunities for NVIDIA and CH Robinson

0.07

Correlation Coefficient

NVIDIA  CH Robinson

Significant diversification

The 3 months correlation between NVIDIA and CH1A is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and CH Robinson Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CH Robinson Worldwide 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 CH Robinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CH Robinson Worldwide has no effect on the direction of NVIDIA i.e., NVIDIA and CH Robinson go up and down completely randomly.

Pair Corralation between NVIDIA and CH Robinson

Given the investment horizon of 90 days NVIDIA is expected to generate 1.26 times more return on investment than CH Robinson. However, NVIDIA is 1.26 times more volatile than CH Robinson Worldwide. It trades about 0.07 of its potential returns per unit of risk. CH Robinson Worldwide is currently generating about 0.03 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	Insignificant
Accuracy	96.77%
Values	Daily Returns

NVIDIA  vs.  CH Robinson Worldwide

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.

CH Robinson Worldwide

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CH Robinson Worldwide are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CH Robinson is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NVIDIA and CH Robinson

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

The idea behind NVIDIA and CH Robinson Worldwide 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.