Correlation Between NVIDIA and Under Armour

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

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

Diversification Opportunities for NVIDIA and Under Armour

0.77

Correlation Coefficient

NVIDIA  Under Armour

Poor diversification

The 3 months correlation between NVIDIA and Under is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Under Armour in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Under Armour 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 Under Armour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Under Armour has no effect on the direction of NVIDIA i.e., NVIDIA and Under Armour go up and down completely randomly.

Pair Corralation between NVIDIA and Under Armour

Assuming the 90 days trading horizon NVIDIA is expected to generate 1.29 times more return on investment than Under Armour. However, NVIDIA is 1.29 times more volatile than Under Armour. It trades about 0.38 of its potential returns per unit of risk. Under Armour is currently generating about 0.14 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	Significant
Accuracy	98.41%
Values	Daily Returns

NVIDIA  vs.  Under Armour

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.

Under Armour

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Under Armour are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Under Armour sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA and Under Armour

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

The idea behind NVIDIA and Under Armour 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.