Correlation Between Vertiv Holdings and NVIDIA

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

By analyzing existing cross correlation between Vertiv Holdings Co and NVIDIA, you can compare the effects of market volatilities on Vertiv Holdings and NVIDIA 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 Vertiv Holdings with a short position of NVIDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vertiv Holdings and NVIDIA.

Diversification Opportunities for Vertiv Holdings and NVIDIA

0.62

Correlation Coefficient

Vertiv Holdings  NVIDIA

Poor diversification

The 3 months correlation between Vertiv and NVIDIA is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Vertiv Holdings Co and NVIDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA and Vertiv Holdings 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 Vertiv Holdings Co are associated (or correlated) with NVIDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA has no effect on the direction of Vertiv Holdings i.e., Vertiv Holdings and NVIDIA go up and down completely randomly.

Pair Corralation between Vertiv Holdings and NVIDIA

Considering the 90-day investment horizon Vertiv Holdings Co is expected to under-perform the NVIDIA. In addition to that, Vertiv Holdings is 1.43 times more volatile than NVIDIA. It trades about -0.09 of its total potential returns per unit of risk. NVIDIA is currently generating about -0.07 per unit of volatility. If you would invest  13,748  in NVIDIA on December 28, 2024 and sell it today you would lose (2,781) from holding NVIDIA or give up 20.23% of portfolio value over 90 days.

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

Vertiv Holdings Co  vs.  NVIDIA

Vertiv Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vertiv Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

NVIDIA

Risk-Adjusted Performance

Very Weak

Over the last 90 days NVIDIA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Vertiv Holdings and NVIDIA

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

The idea behind Vertiv Holdings Co and NVIDIA 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.