Correlation Between NVIDIA and Exploits Discovery

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

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

Diversification Opportunities for NVIDIA and Exploits Discovery

0.58

Correlation Coefficient

NVIDIA  Exploits Discovery

Very weak diversification

The 3 months correlation between NVIDIA and Exploits is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Exploits Discovery Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exploits Discovery Corp 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 Exploits Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exploits Discovery Corp has no effect on the direction of NVIDIA i.e., NVIDIA and Exploits Discovery go up and down completely randomly.

Pair Corralation between NVIDIA and Exploits Discovery

Given the investment horizon of 90 days NVIDIA is expected to under-perform the Exploits Discovery. But the stock apears to be less risky and, when comparing its historical volatility, NVIDIA is 1.91 times less risky than Exploits Discovery. The stock trades about -0.07 of its potential returns per unit of risk. The Exploits Discovery Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2.90  in Exploits Discovery Corp on December 30, 2024 and sell it today you would lose (0.40) from holding Exploits Discovery Corp or give up 13.79% of portfolio value over 90 days.

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

NVIDIA  vs.  Exploits Discovery Corp

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.

Exploits Discovery Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exploits Discovery Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Exploits Discovery 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 Exploits Discovery

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

The idea behind NVIDIA and Exploits Discovery Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.