Correlation Between NVIDIA and Appreciate Holdings

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

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

Diversification Opportunities for NVIDIA and Appreciate Holdings

-0.53

Correlation Coefficient

NVIDIA  Appreciate Holdings

Excellent diversification

The 3 months correlation between NVIDIA and Appreciate is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Appreciate Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appreciate Holdings 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 Appreciate Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appreciate Holdings has no effect on the direction of NVIDIA i.e., NVIDIA and Appreciate Holdings go up and down completely randomly.

Pair Corralation between NVIDIA and Appreciate Holdings

If you would invest  13,186  in NVIDIA on September 12, 2024 and sell it today you would earn a total of  321.00  from holding NVIDIA or generate 2.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.8%
Values	Daily Returns

NVIDIA  vs.  Appreciate Holdings

NVIDIA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, NVIDIA sustained solid returns over the last few months and may actually be approaching a breakup point.

Appreciate Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Appreciate Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Appreciate Holdings is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with NVIDIA and Appreciate Holdings

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

The idea behind NVIDIA and Appreciate Holdings 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.