Correlation Between NVIDIA CDR and Sprott Physical

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

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

Diversification Opportunities for NVIDIA CDR and Sprott Physical

0.32

Correlation Coefficient

NVIDIA CDR  Sprott Physical

Weak diversification

The 3 months correlation between NVIDIA and Sprott is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA CDR and Sprott Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Gold and NVIDIA CDR 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 CDR are associated (or correlated) with Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Gold has no effect on the direction of NVIDIA CDR i.e., NVIDIA CDR and Sprott Physical go up and down completely randomly.

Pair Corralation between NVIDIA CDR and Sprott Physical

Assuming the 90 days trading horizon NVIDIA CDR is expected to generate 1.73 times more return on investment than Sprott Physical. However, NVIDIA CDR is 1.73 times more volatile than Sprott Physical Gold. It trades about 0.1 of its potential returns per unit of risk. Sprott Physical Gold is currently generating about 0.03 per unit of risk. If you would invest  2,737  in NVIDIA CDR on September 16, 2024 and sell it today you would earn a total of  399.00  from holding NVIDIA CDR or generate 14.58% return on investment over 90 days.

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

NVIDIA CDR  vs.  Sprott Physical Gold

NVIDIA CDR

Risk-Adjusted Performance

8 of 100

OK

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

Sprott Physical Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sprott Physical is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NVIDIA CDR and Sprott Physical

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

The idea behind NVIDIA CDR and Sprott Physical Gold 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.