Correlation Between NVIDIA and Quad Graphics

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

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

Diversification Opportunities for NVIDIA and Quad Graphics

0.45

Correlation Coefficient

NVIDIA  Quad Graphics

Very weak diversification

The 3 months correlation between NVIDIA and Quad is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Quad Graphics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quad Graphics 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 Quad Graphics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quad Graphics has no effect on the direction of NVIDIA i.e., NVIDIA and Quad Graphics go up and down completely randomly.

Pair Corralation between NVIDIA and Quad Graphics

Given the investment horizon of 90 days NVIDIA is expected to generate 0.88 times more return on investment than Quad Graphics. However, NVIDIA is 1.13 times less risky than Quad Graphics. It trades about 0.14 of its potential returns per unit of risk. Quad Graphics is currently generating about 0.05 per unit of risk. If you would invest  4,661  in NVIDIA on October 5, 2024 and sell it today you would earn a total of  9,170  from holding NVIDIA or generate 196.74% return on investment over 90 days.

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

NVIDIA  vs.  Quad Graphics

NVIDIA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, NVIDIA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Quad Graphics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Quad Graphics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Quad Graphics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA and Quad Graphics

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

The idea behind NVIDIA and Quad Graphics 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.