Correlation Between NVIDIA and Tearlach Resources

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

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

Diversification Opportunities for NVIDIA and Tearlach Resources

0.33

Correlation Coefficient

NVIDIA  Tearlach Resources

Weak diversification

The 3 months correlation between NVIDIA and Tearlach is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Tearlach Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tearlach Resources 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 Tearlach Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tearlach Resources has no effect on the direction of NVIDIA i.e., NVIDIA and Tearlach Resources go up and down completely randomly.

Pair Corralation between NVIDIA and Tearlach Resources

Given the investment horizon of 90 days NVIDIA is expected to under-perform the Tearlach Resources. But the stock apears to be less risky and, when comparing its historical volatility, NVIDIA is 4.13 times less risky than Tearlach Resources. The stock trades about -0.07 of its potential returns per unit of risk. The Tearlach Resources Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1.17  in Tearlach Resources Limited on December 30, 2024 and sell it today you would earn a total of  0.06  from holding Tearlach Resources Limited or generate 5.13% return on investment over 90 days.

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

NVIDIA  vs.  Tearlach Resources 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 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.

Tearlach Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tearlach Resources Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Tearlach Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA and Tearlach Resources

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

The idea behind NVIDIA and Tearlach Resources 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.