Correlation Between NVIDIA Corp and Tobii AB

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

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

Diversification Opportunities for NVIDIA Corp and Tobii AB

-0.59

Correlation Coefficient

NVIDIA Corp  Tobii AB

Excellent diversification

The 3 months correlation between NVIDIA and Tobii is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA Corp and Tobii AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tobii AB and NVIDIA Corp 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 Corp are associated (or correlated) with Tobii AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tobii AB has no effect on the direction of NVIDIA Corp i.e., NVIDIA Corp and Tobii AB go up and down completely randomly.

Pair Corralation between NVIDIA Corp and Tobii AB

Assuming the 90 days trading horizon NVIDIA Corp is expected to generate 0.63 times more return on investment than Tobii AB. However, NVIDIA Corp is 1.58 times less risky than Tobii AB. It trades about 0.11 of its potential returns per unit of risk. Tobii AB is currently generating about -0.09 per unit of risk. If you would invest  12,014  in NVIDIA Corp on September 12, 2024 and sell it today you would earn a total of  1,782  from holding NVIDIA Corp or generate 14.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

NVIDIA Corp  vs.  Tobii AB

NVIDIA Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, NVIDIA Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Tobii AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NVIDIA Corp and Tobii AB

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

The idea behind NVIDIA Corp and Tobii AB 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.