Correlation Between NVIDIA and Worldline

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

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

Diversification Opportunities for NVIDIA and Worldline

-0.06

Correlation Coefficient

NVIDIA  Worldline

Good diversification

The 3 months correlation between NVIDIA and Worldline is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Worldline SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldline SA 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 Worldline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldline SA has no effect on the direction of NVIDIA i.e., NVIDIA and Worldline go up and down completely randomly.

Pair Corralation between NVIDIA and Worldline

Given the investment horizon of 90 days NVIDIA is expected to generate 114.46 times less return on investment than Worldline. But when comparing it to its historical volatility, NVIDIA is 1.17 times less risky than Worldline. It trades about 0.0 of its potential returns per unit of risk. Worldline SA is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  800.00  in Worldline SA on October 6, 2024 and sell it today you would earn a total of  100.00  from holding Worldline SA or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

NVIDIA  vs.  Worldline SA

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.

Worldline SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Worldline SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Worldline reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA and Worldline

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

The idea behind NVIDIA and Worldline SA 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.