Correlation Between NVIDIA and KMD
Can any of the company-specific risk be diversified away by investing in both NVIDIA and KMD 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 KMD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and KMD, you can compare the effects of market volatilities on NVIDIA and KMD 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 KMD. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and KMD.
Diversification Opportunities for NVIDIA and KMD
Very weak diversification
The 3 months correlation between NVIDIA and KMD is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and KMD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMD 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 KMD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KMD has no effect on the direction of NVIDIA i.e., NVIDIA and KMD go up and down completely randomly.
Pair Corralation between NVIDIA and KMD
Given the investment horizon of 90 days NVIDIA is expected to generate 2.71 times less return on investment than KMD. But when comparing it to its historical volatility, NVIDIA is 3.46 times less risky than KMD. It trades about 0.06 of its potential returns per unit of risk. KMD is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3.36 in KMD on July 20, 2025 and sell it today you would earn a total of 0.29 from holding KMD or generate 8.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.48% |
| Values | Daily Returns |
NVIDIA vs. KMD
Performance |
| Timeline |
| NVIDIA |
| KMD |
NVIDIA and KMD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and KMD
The main advantage of trading using opposite NVIDIA and KMD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, KMD 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 KMD will offset losses from the drop in KMD's long position.| NVIDIA vs. Microsoft | NVIDIA vs. Apple Inc | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Broadcom |
Check out your portfolio center.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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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