Correlation Between NVIDIA and Compagnie Financire

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

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

Diversification Opportunities for NVIDIA and Compagnie Financire

-0.23

Correlation Coefficient

NVIDIA  Compagnie Financire

Very good diversification

The 3 months correlation between NVIDIA and Compagnie is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Compagnie Financire Richemont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Financire 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 Compagnie Financire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Financire has no effect on the direction of NVIDIA i.e., NVIDIA and Compagnie Financire go up and down completely randomly.

Pair Corralation between NVIDIA and Compagnie Financire

Given the investment horizon of 90 days NVIDIA is expected to generate 1.19 times more return on investment than Compagnie Financire. However, NVIDIA is 1.19 times more volatile than Compagnie Financire Richemont. It trades about 0.14 of its potential returns per unit of risk. Compagnie Financire Richemont is currently generating about 0.02 per unit of risk. If you would invest  2,177  in NVIDIA on October 5, 2024 and sell it today you would earn a total of  11,654  from holding NVIDIA or generate 535.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.96%
Values	Daily Returns

NVIDIA  vs.  Compagnie Financire Richemont

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.

Compagnie Financire

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Financire Richemont are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Compagnie Financire is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NVIDIA and Compagnie Financire

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

The idea behind NVIDIA and Compagnie Financire Richemont 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.