Correlation Between NVIDIA and Wisekey International

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

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

Diversification Opportunities for NVIDIA and Wisekey International

-0.12

Correlation Coefficient

NVIDIA  Wisekey International

Good diversification

The 3 months correlation between NVIDIA and Wisekey is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Wisekey International Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wisekey International 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 Wisekey International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wisekey International has no effect on the direction of NVIDIA i.e., NVIDIA and Wisekey International go up and down completely randomly.

Pair Corralation between NVIDIA and Wisekey International

Given the investment horizon of 90 days NVIDIA is expected to under-perform the Wisekey International. But the stock apears to be less risky and, when comparing its historical volatility, NVIDIA is 14.22 times less risky than Wisekey International. The stock trades about -0.14 of its potential returns per unit of risk. The Wisekey International Holding is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  197.00  in Wisekey International Holding on September 19, 2024 and sell it today you would earn a total of  748.00  from holding Wisekey International Holding or generate 379.7% return on investment over 90 days.

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

NVIDIA  vs.  Wisekey International Holding

NVIDIA

Risk-Adjusted Performance

6 of 100

OK

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 weak fundamental indicators, NVIDIA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Wisekey International

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wisekey International Holding are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Wisekey International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA and Wisekey International

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

The idea behind NVIDIA and Wisekey International Holding 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.