Correlation Between NVIDIA and Vimeo

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

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

Diversification Opportunities for NVIDIA and Vimeo

0.16

Correlation Coefficient

NVIDIA  Vimeo

Average diversification

The 3 months correlation between NVIDIA and Vimeo is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Vimeo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vimeo Inc 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 Vimeo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vimeo Inc has no effect on the direction of NVIDIA i.e., NVIDIA and Vimeo go up and down completely randomly.

Pair Corralation between NVIDIA and Vimeo

Given the investment horizon of 90 days NVIDIA is expected to generate 0.82 times more return on investment than Vimeo. However, NVIDIA is 1.22 times less risky than Vimeo. It trades about 0.15 of its potential returns per unit of risk. Vimeo Inc is currently generating about 0.05 per unit of risk. If you would invest  1,689  in NVIDIA on October 4, 2024 and sell it today you would earn a total of  12,142  from holding NVIDIA or generate 718.89% return on investment over 90 days.

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

NVIDIA  vs.  Vimeo Inc

NVIDIA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 6 (%) 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.

Vimeo Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vimeo Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical and fundamental indicators, Vimeo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA and Vimeo

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

The idea behind NVIDIA and Vimeo Inc 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.