Correlation Between NVIDIA and Informa Plc

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

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

Diversification Opportunities for NVIDIA and Informa Plc

-0.42

Correlation Coefficient

NVIDIA  Informa Plc

Very good diversification

The 3 months correlation between NVIDIA and Informa is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Informa plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Informa plc 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 Informa Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Informa plc has no effect on the direction of NVIDIA i.e., NVIDIA and Informa Plc go up and down completely randomly.

Pair Corralation between NVIDIA and Informa Plc

Given the investment horizon of 90 days NVIDIA is expected to generate 0.81 times more return on investment than Informa Plc. However, NVIDIA is 1.23 times less risky than Informa Plc. It trades about 0.12 of its potential returns per unit of risk. Informa plc is currently generating about 0.01 per unit of risk. If you would invest  11,909  in NVIDIA on September 13, 2024 and sell it today you would earn a total of  2,022  from holding NVIDIA or generate 16.98% 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.  Informa plc

NVIDIA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, NVIDIA sustained solid returns over the last few months and may actually be approaching a breakup point.

Informa plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Informa plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking indicators, Informa Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NVIDIA and Informa Plc

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

The idea behind NVIDIA and Informa plc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.