Correlation Between NVIDIA and Forum Merger

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

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

Diversification Opportunities for NVIDIA and Forum Merger

-0.45

Correlation Coefficient

NVIDIA  Forum Merger

Very good diversification

The 3 months correlation between NVIDIA and Forum is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Forum Merger IV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forum Merger IV 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 Forum Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forum Merger IV has no effect on the direction of NVIDIA i.e., NVIDIA and Forum Merger go up and down completely randomly.

Pair Corralation between NVIDIA and Forum Merger

If you would invest  0.13  in Forum Merger IV on September 18, 2024 and sell it today you would earn a total of  0.00  from holding Forum Merger IV or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

NVIDIA  vs.  Forum Merger IV

NVIDIA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, NVIDIA sustained solid returns over the last few months and may actually be approaching a breakup point.

Forum Merger IV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forum Merger IV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Forum Merger is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with NVIDIA and Forum Merger

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

The idea behind NVIDIA and Forum Merger IV 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.