Correlation Between NVIDIA and Lewis Group

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

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

Diversification Opportunities for NVIDIA and Lewis Group

0.59

Correlation Coefficient

NVIDIA  Lewis Group

Very weak diversification

The 3 months correlation between NVIDIA and Lewis is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Lewis Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lewis Group Limited 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 Lewis Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lewis Group Limited has no effect on the direction of NVIDIA i.e., NVIDIA and Lewis Group go up and down completely randomly.

Pair Corralation between NVIDIA and Lewis Group

Given the investment horizon of 90 days NVIDIA is expected to under-perform the Lewis Group. In addition to that, NVIDIA is 2.56 times more volatile than Lewis Group Limited. It trades about -0.05 of its total potential returns per unit of risk. Lewis Group Limited is currently generating about -0.12 per unit of volatility. If you would invest  790,800  in Lewis Group Limited on December 23, 2024 and sell it today you would lose (90,800) from holding Lewis Group Limited or give up 11.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

NVIDIA  vs.  Lewis Group Limited

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 latest unsteady performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Lewis Group Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lewis Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with NVIDIA and Lewis Group

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

The idea behind NVIDIA and Lewis Group Limited 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.