Correlation Between NVIDIA CDR and OceanaGold

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

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

Diversification Opportunities for NVIDIA CDR and OceanaGold

0.66

Correlation Coefficient

NVIDIA CDR  OceanaGold

Poor diversification

The 3 months correlation between NVIDIA and OceanaGold is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA CDR and OceanaGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OceanaGold 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 OceanaGold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OceanaGold has no effect on the direction of NVIDIA CDR i.e., NVIDIA CDR and OceanaGold go up and down completely randomly.

Pair Corralation between NVIDIA CDR and OceanaGold

Assuming the 90 days trading horizon NVIDIA CDR is expected to generate 1.1 times less return on investment than OceanaGold. But when comparing it to its historical volatility, NVIDIA CDR is 1.05 times less risky than OceanaGold. It trades about 0.19 of its potential returns per unit of risk. OceanaGold is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  333.00  in OceanaGold on September 4, 2024 and sell it today you would earn a total of  116.00  from holding OceanaGold or generate 34.83% return on investment over 90 days.

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

NVIDIA CDR  vs.  OceanaGold

NVIDIA CDR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA CDR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, NVIDIA CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

OceanaGold

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OceanaGold are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, OceanaGold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA CDR and OceanaGold

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

The idea behind NVIDIA CDR and OceanaGold 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.