Correlation Between NVIDIA and XTANT MEDICAL

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

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

Diversification Opportunities for NVIDIA and XTANT MEDICAL

-0.56

Correlation Coefficient

NVIDIA  XTANT MEDICAL

Excellent diversification

The 3 months correlation between NVIDIA and XTANT is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and XTANT MEDICAL HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XTANT MEDICAL HLDGS 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 XTANT MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XTANT MEDICAL HLDGS has no effect on the direction of NVIDIA i.e., NVIDIA and XTANT MEDICAL go up and down completely randomly.

Pair Corralation between NVIDIA and XTANT MEDICAL

Given the investment horizon of 90 days NVIDIA is expected to generate 0.62 times more return on investment than XTANT MEDICAL. However, NVIDIA is 1.6 times less risky than XTANT MEDICAL. It trades about 0.15 of its potential returns per unit of risk. XTANT MEDICAL HLDGS is currently generating about 0.02 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 Against
Strength	Very Weak
Accuracy	98.8%
Values	Daily Returns

NVIDIA  vs.  XTANT MEDICAL HLDGS

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.

XTANT MEDICAL HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XTANT MEDICAL HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NVIDIA and XTANT MEDICAL

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

The idea behind NVIDIA and XTANT MEDICAL HLDGS 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.