Correlation Between NVIDIA and Fuji Media

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

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

Diversification Opportunities for NVIDIA and Fuji Media

-0.37

Correlation Coefficient

NVIDIA  Fuji Media

Very good diversification

The 3 months correlation between NVIDIA and Fuji is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Fuji Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuji Media Holdings 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 Fuji Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuji Media Holdings has no effect on the direction of NVIDIA i.e., NVIDIA and Fuji Media go up and down completely randomly.

Pair Corralation between NVIDIA and Fuji Media

Given the investment horizon of 90 days NVIDIA is expected to generate 1.14 times more return on investment than Fuji Media. However, NVIDIA is 1.14 times more volatile than Fuji Media Holdings. It trades about 0.04 of its potential returns per unit of risk. Fuji Media Holdings is currently generating about 0.05 per unit of risk. If you would invest  13,990  in NVIDIA on October 6, 2024 and sell it today you would earn a total of  457.00  from holding NVIDIA or generate 3.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.12%
Values	Daily Returns

NVIDIA  vs.  Fuji Media Holdings

NVIDIA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, NVIDIA sustained solid returns over the last few months and may actually be approaching a breakup point.

Fuji Media Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NVIDIA and Fuji Media

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

The idea behind NVIDIA and Fuji Media Holdings 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.