Correlation Between NVIDIA and Globex Mining

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

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

Diversification Opportunities for NVIDIA and Globex Mining

-0.51

Correlation Coefficient

NVIDIA  Globex Mining

Excellent diversification

The 3 months correlation between NVIDIA and Globex is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Globex Mining Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globex Mining Enterprises 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 Globex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globex Mining Enterprises has no effect on the direction of NVIDIA i.e., NVIDIA and Globex Mining go up and down completely randomly.

Pair Corralation between NVIDIA and Globex Mining

Given the investment horizon of 90 days NVIDIA is expected to generate 1.25 times more return on investment than Globex Mining. However, NVIDIA is 1.25 times more volatile than Globex Mining Enterprises. It trades about 0.01 of its potential returns per unit of risk. Globex Mining Enterprises is currently generating about -0.02 per unit of risk. If you would invest  11,666  in NVIDIA on December 3, 2024 and sell it today you would lose (98.00) from holding NVIDIA or give up 0.84% of portfolio value over 90 days.

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

NVIDIA  vs.  Globex Mining Enterprises

NVIDIA

Risk-Adjusted Performance

Very Weak

Over the last 90 days NVIDIA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Globex Mining Enterprises

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Globex Mining Enterprises are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Globex Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA and Globex Mining

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

The idea behind NVIDIA and Globex Mining Enterprises 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.