Correlation Between NVIDIA and Bread Financial

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

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

Diversification Opportunities for NVIDIA and Bread Financial

0.87

Correlation Coefficient

NVIDIA  Bread Financial

Very poor diversification

The 3 months correlation between NVIDIA and Bread is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Bread Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bread Financial Holdings 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 Bread Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bread Financial Holdings has no effect on the direction of NVIDIA i.e., NVIDIA and Bread Financial go up and down completely randomly.

Pair Corralation between NVIDIA and Bread Financial

Assuming the 90 days trading horizon NVIDIA is expected to generate 0.75 times more return on investment than Bread Financial. However, NVIDIA is 1.33 times less risky than Bread Financial. It trades about 0.38 of its potential returns per unit of risk. Bread Financial Holdings is currently generating about 0.16 per unit of risk. If you would invest  1,257  in NVIDIA on April 24, 2025 and sell it today you would earn a total of  683.00  from holding NVIDIA or generate 54.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

NVIDIA  vs.  Bread Financial Holdings

NVIDIA

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, NVIDIA sustained solid returns over the last few months and may actually be approaching a breakup point.

Bread Financial Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bread Financial Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Bread Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA and Bread Financial

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

The idea behind NVIDIA and Bread Financial Holdings 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.