Correlation Between NVIDIA and Zonte Metals

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

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

Diversification Opportunities for NVIDIA and Zonte Metals

-0.47

Correlation Coefficient

NVIDIA  Zonte Metals

Very good diversification

The 3 months correlation between NVIDIA and Zonte is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Zonte Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zonte Metals 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 Zonte Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zonte Metals has no effect on the direction of NVIDIA i.e., NVIDIA and Zonte Metals go up and down completely randomly.

Pair Corralation between NVIDIA and Zonte Metals

Given the investment horizon of 90 days NVIDIA is expected to generate 0.4 times more return on investment than Zonte Metals. However, NVIDIA is 2.49 times less risky than Zonte Metals. It trades about 0.15 of its potential returns per unit of risk. Zonte Metals is currently generating about 0.03 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	100.0%
Values	Daily Returns

NVIDIA  vs.  Zonte Metals

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.

Zonte Metals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zonte Metals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Zonte Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA and Zonte Metals

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

The idea behind NVIDIA and Zonte Metals 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.