Correlation Between NVIDIA and Growth Fund

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

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

Diversification Opportunities for NVIDIA and Growth Fund

0.54

Correlation Coefficient

NVIDIA  Growth Fund

Very weak diversification

The 3 months correlation between NVIDIA and Growth is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Growth Fund Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund Growth 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 Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund Growth has no effect on the direction of NVIDIA i.e., NVIDIA and Growth Fund go up and down completely randomly.

Pair Corralation between NVIDIA and Growth Fund

Given the investment horizon of 90 days NVIDIA is expected to generate 0.96 times more return on investment than Growth Fund. However, NVIDIA is 1.04 times less risky than Growth Fund. It trades about -0.11 of its potential returns per unit of risk. Growth Fund Growth is currently generating about -0.28 per unit of risk. If you would invest  14,513  in NVIDIA on October 5, 2024 and sell it today you would lose (682.00) from holding NVIDIA or give up 4.7% of portfolio value over 90 days.

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

NVIDIA  vs.  Growth Fund Growth

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.

Growth Fund Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Growth Fund Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Growth Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NVIDIA and Growth Fund

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

The idea behind NVIDIA and Growth Fund Growth 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.