Correlation Between NVIDIA and Green Shift

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

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

Diversification Opportunities for NVIDIA and Green Shift

0.32

Correlation Coefficient

NVIDIA  Green Shift

Weak diversification

The 3 months correlation between NVIDIA and Green is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Green Shift Commodities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Shift Commodities 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 Green Shift. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Shift Commodities has no effect on the direction of NVIDIA i.e., NVIDIA and Green Shift go up and down completely randomly.

Pair Corralation between NVIDIA and Green Shift

Given the investment horizon of 90 days NVIDIA is expected to under-perform the Green Shift. But the stock apears to be less risky and, when comparing its historical volatility, NVIDIA is 2.76 times less risky than Green Shift. The stock trades about -0.07 of its potential returns per unit of risk. The Green Shift Commodities is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2.82  in Green Shift Commodities on December 29, 2024 and sell it today you would lose (0.70) from holding Green Shift Commodities or give up 24.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

NVIDIA  vs.  Green Shift Commodities

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.

Green Shift Commodities

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Green Shift Commodities are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating primary indicators, Green Shift may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with NVIDIA and Green Shift

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

The idea behind NVIDIA and Green Shift Commodities 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.