Correlation Between NVIDIA and Deka Deutsche

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

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

Diversification Opportunities for NVIDIA and Deka Deutsche

-0.1

Correlation Coefficient

NVIDIA  Deka Deutsche

Good diversification

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

Pair Corralation between NVIDIA and Deka Deutsche

Given the investment horizon of 90 days NVIDIA is expected to generate 16.39 times more return on investment than Deka Deutsche. However, NVIDIA is 16.39 times more volatile than Deka Deutsche Boerse. It trades about -0.02 of its potential returns per unit of risk. Deka Deutsche Boerse is currently generating about -0.27 per unit of risk. If you would invest  13,967  in NVIDIA on October 22, 2024 and sell it today you would lose (196.00) from holding NVIDIA or give up 1.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.89%
Values	Daily Returns

NVIDIA  vs.  Deka Deutsche Boerse

NVIDIA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NVIDIA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, NVIDIA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Deka Deutsche Boerse

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deka Deutsche Boerse has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Deka Deutsche is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with NVIDIA and Deka Deutsche

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

The idea behind NVIDIA and Deka Deutsche Boerse 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.