Correlation Between NVIDIA and Hargreaves Lansdown

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

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

Diversification Opportunities for NVIDIA and Hargreaves Lansdown

-0.16

Correlation Coefficient

NVIDIA  Hargreaves Lansdown

Good diversification

The 3 months correlation between NVIDIA and Hargreaves is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Hargreaves Lansdown plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hargreaves Lansdown plc 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 Hargreaves Lansdown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hargreaves Lansdown plc has no effect on the direction of NVIDIA i.e., NVIDIA and Hargreaves Lansdown go up and down completely randomly.

Pair Corralation between NVIDIA and Hargreaves Lansdown

Given the investment horizon of 90 days NVIDIA is expected to generate 1.08 times more return on investment than Hargreaves Lansdown. However, NVIDIA is 1.08 times more volatile than Hargreaves Lansdown plc. It trades about 0.1 of its potential returns per unit of risk. Hargreaves Lansdown plc is currently generating about 0.08 per unit of risk. If you would invest  14,022  in NVIDIA on October 25, 2024 and sell it today you would earn a total of  685.00  from holding NVIDIA or generate 4.89% return on investment over 90 days.

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

NVIDIA  vs.  Hargreaves Lansdown plc

NVIDIA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Hargreaves Lansdown plc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hargreaves Lansdown plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Hargreaves Lansdown is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NVIDIA and Hargreaves Lansdown

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

The idea behind NVIDIA and Hargreaves Lansdown plc 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.