NVDA vs TSM: Stock Returns, Risk & Volatility (2026)

Q: Which is a better investment: NVDA or TSM?

Over the past year, TSM looks like the better investment: it had higher total return (TSM +116.9% vs NVDA +62.8%) and a higher Sharpe ratio (TSM 2.15 vs NVDA 1.26). On risk, TSM was less volatile (TSM 37.9% vs NVDA 43.3%), TSM had a smaller max drawdown (TSM -23.0% vs NVDA -24.5%), and TSM had less severe losses on the worst 5% of days (Expected Shortfall of TSM -4.85% vs NVDA -5.98%).

Written by Gale Finance Team

Reviewed by Sid Kalla CFA Charterholder

Quick answer

Which is a better investment: NVDA or TSM?

Over the past year, TSM outperformed (+62.8% vs +116.9%) with a Sharpe ratio of 2.15.

Total Return

NVDA +62.8%

TSM WIN +116.9%

Sharpe Ratio

NVDA 1.26

TSM WIN 2.15

Annualized Volatility

NVDA 43.3%

TSM WIN 37.9%

Max Drawdown

NVDA -24.5%

TSM WIN -23.0%

Analysis period: 2025-02-27 to 2026-02-25

NVDA Total Return

↑ +62.8%

TSM Total Return

↑ +116.9%

Relative Performance of NVDA vs TSM (Normalized to 100)

NVDA TSM

Normalized to 100 at start date for comparison

Key Takeaways

Total Return: NVDA delivered a +62.8% total return, while TSM returned +116.9% over the same period. TSM outperformed on total returns.
Risk-Adjusted Return (Sharpe Ratio): TSM had a higher Sharpe (2.15 vs 1.26), indicating better risk-adjusted performance.
Volatility (Annualized): NVDA was more volatile, with 43.3% annualized volatility, versus 37.9% for TSM.
Maximum Drawdown: TSM's maximum drawdown was -23.0%, while NVDA experienced a deeper drawdown of -24.5%.
Tail Risk (VaR & Expected Shortfall): At the 5% level (daily log returns), NVDA's VaR was -4.04% and its Expected Shortfall (CVaR) was -5.98%; TSM's were -3.61% and -4.85%. VaR is the cutoff; Expected Shortfall is the average move on the worst days.
Skew & Kurtosis: Skew: NVDA 0.54 vs TSM 0.17. Excess kurtosis: NVDA 6.46 vs TSM 2.30. Negative skew leans downside; higher excess kurtosis means fatter tails.
Tail Days & Extremes: 2σ tail days (down/up): NVDA 8/4, TSM 6/4. Worst day: NVDA -8.69% (2025-03-03) vs TSM -7.64% (2025-04-03). Best day: NVDA +18.72% (2025-04-09) vs TSM +12.29% (2025-04-09).
Risk ratios: Sortino - NVDA: 1.95 vs. TSM: 3.47 , Calmar - NVDA: 2.58 vs. TSM: 5.13 , Sterling - NVDA: 2.82 vs. TSM: 6.80 , Treynor - NVDA: 0.32 vs. TSM: 0.57 , Ulcer Index - NVDA: 8.39% vs. TSM: 5.60%

Nvidia vs Taiwan Semiconductor Correlation

0.68 Average Correlation

Nvidia and Taiwan Semiconductor are strongly correlated over the past year. With a correlation of 0.68, these assets tend to move together, limiting diversification benefits.

For portfolio construction, this strong correlation means holding both NVDA and TSM provides limited risk reduction — they're likely to decline together in downturns.

Metric	Value
Current (30-day)	0.62
Average (full period)	0.68
Minimum	0.28
Maximum	0.93

Correlation measures how closely two assets move together. Values near +1 indicate strong co-movement, near 0 indicates independence, and negative values indicate inverse movement.

Investment Comparison

If you invested $10,000 in each asset on February 27, 2025:

NVDA $16,280.67 +62.8%

TSM $21,694.23 +116.9%

Difference: $5,413.56 (TSM ahead)

Nvidia and Taiwan Semiconductor: Risk Analysis

Nvidia experienced its maximum drawdown of -24.5% from 2025-02-28 to 2025-04-04. It took 39 days to recover.

Taiwan Semiconductor experienced its maximum drawdown of -23% from 2025-03-05 to 2025-04-08. It took 34 days to recover.

Smaller drawdowns and faster recoveries indicate lower downside risk and greater resilience during market stress.

Sharpe Ratio of NVDA and TSM

NVDA Sharpe Ratio

↑ 1.26

TSM Sharpe Ratio

↑ 2.15

Sharpe ratio measures return per unit of risk (volatility). A higher Sharpe indicates better risk-adjusted performance. TSM had a higher Sharpe (2.15 vs 1.26), indicating better risk-adjusted performance.

A Sharpe above 1.0 is generally considered good, above 2.0 is excellent. Negative Sharpe means the asset underperformed the risk-free rate. Calculated on each asset's full 365-day lookback of available prices and annualized using the asset calendar (365 for crypto, 252 trading days for equities/ETFs/metals).

Sortino Ratio of NVDA and TSM

NVDA Sortino Ratio

↑ 1.95

TSM Sortino Ratio

↑ 3.47

Sortino ratio measures return per unit of downside risk. Unlike Sharpe, it only counts downside deviation (returns below the target return). TSM had better downside-adjusted returns.

A higher Sortino is better. It's useful when upside volatility is common (crypto is the obvious example). Downside deviation: NVDA 27.8% vs TSM 23.4%. Calculated on each asset's full 365-day lookback of available prices, using the daily risk-free rate as the target return, and annualized using the asset calendar (365 for crypto, 252 trading days for equities/ETFs/metals).

Calmar Ratio of NVDA and TSM

NVDA Calmar Ratio

↑ 2.58

TSM Calmar Ratio

↑ 5.13

Calmar ratio compares CAGR to maximum drawdown. Higher Calmar means more return per unit of worst drawdown. TSM posted the higher Calmar ratio.

Calmar is computed on each asset's full 365-day lookback and uses the max drawdown over that same window.

Sterling Ratio of NVDA and TSM

NVDA Sterling Ratio

↑ 2.82

TSM Sterling Ratio

↑ 6.80

Sterling ratio measures excess return per unit of average drawdown (typically drawdowns worse than 10%). TSM posted the higher Sterling ratio.

Sterling uses average drawdown events deeper than 10% and subtracts the risk-free rate to report excess return.

Treynor Ratio of NVDA and TSM

NVDA Treynor Ratio

↑ 0.32

TSM Treynor Ratio

↑ 0.57

Treynor ratio measures excess return per unit of market risk (beta) instead of total volatility. TSM posted the higher Treynor ratio.

Treynor uses beta vs the S&P 500 (SPY) on shared dates and the average 3-month Treasury rate as the risk-free rate.

Ulcer Index of NVDA and TSM

NVDA Ulcer Index

8.39%

TSM Ulcer Index

5.60%

Ulcer Index captures drawdown depth and duration. Lower Ulcer Index means less drawdown pain. TSM had the lower Ulcer Index (less drawdown pain).

Ulcer Index is computed from each asset's drawdown series over the full lookback window.

Tail Risk & Distribution Shape (1-Year): Nvidia vs. Taiwan Semiconductor

This section looks at the shape of daily returns, not just the average. Tail stats are computed per asset on its own daily series (crypto includes weekends). We use daily log returns $\ln\left(\frac{P_t}{P_{t-1}}\right)$ so multi-day moves add cleanly.

Definitions: Value at Risk (VaR), Expected Shortfall, skew, kurtosis, and fat tails.

Metric (1-Year)	NVDA	TSM
5% VaR (daily log return)	-4.04%	-3.61%
5% Expected Shortfall (CVaR)	-5.98% (worst 13 days)	-4.85% (worst 13 days)
Skew	0.54	0.17
Excess kurtosis	6.46	2.30
2σ tail days (down / up)	8 / 4	6 / 4
Worst day	-8.69% (2025-03-03)	-7.64% (2025-04-03)
Best day	+18.72% (2025-04-09)	+12.29% (2025-04-09)

Downside co-moves (2σ) — 1-Year

Computed on shared dates only (n=249). A “2σ downside move” means a shared-close log return more than 2 standard deviations below that asset’s own mean on this shared-date series. Dates below show simple returns (%) for readability.

When TSM has a big down day, NVDA also does

66.7%

4 / 6 days

When NVDA has a big down day, TSM also does

50.0%

4 / 8 days

Show downside tail dates

Dates below are shared-date observations. The “Date” is the period end (close). Tail thresholds are computed on log returns, but the table shows simple returns (%) for readability. Returns are computed from the previous shared close to this one (for example, Friday → Monday includes weekend moves).

Days when both NVDA and TSM had a big down day (2σ)

Date (interval)	NVDA	TSM
2025-03-06	-5.74%	-4.57%
2025-04-03	-7.81%	-7.64%
2025-04-04	-7.36%	-6.72%
2025-04-10	-5.91%	-4.80%

Days when NVDA had a big down day

Date (interval)	NVDA	TSM
2025-02-28 → 2025-03-03	-8.69%	-4.19%
2025-03-06	-5.74%	-4.57%
2025-03-07 → 2025-03-10	-5.07%	-3.64%
2025-03-26	-5.74%	-4.09%
2025-04-03	-7.81%	-7.64%
2025-04-04	-7.36%	-6.72%
2025-04-10	-5.91%	-4.80%
2025-04-16	-6.87%	-3.60%

Days when TSM had a big down day

Date (interval)	NVDA	TSM
2025-03-06	-5.74%	-4.57%
2025-04-03	-7.81%	-7.64%
2025-04-04	-7.36%	-6.72%
2025-04-10	-5.91%	-4.80%
2025-10-10	-4.89%	-6.41%
2026-01-16 → 2026-01-20	-4.38%	-4.45%

Read this as “how ugly the ugly days get”, not as a precise forecast. One-year samples are small, so tail estimates are inherently noisy.

Nvidia vs Taiwan Semiconductor Volatility (NVDA vs TSM)

NVDA Volatility

43.3%

±2.73% daily

TSM Volatility

37.9%

±2.39% daily

Typical daily swing

NVDA

±2.73%

TSM

±2.39%

Nvidia's annualized volatility of 43.3% means it typically moves ±2.73% on any given day.

Taiwan Semiconductor's annualized volatility of 37.9% means it typically moves ±2.39% on any given day.

NVDA's higher volatility means a wider path to returns — this can be attractive for tactical, shorter-term exposure, while TSM's smoother profile may better suit long-term allocators seeking steadier growth.

For comparison, the S&P 500 typically has 15-18% annualized volatility, translating to roughly ±1% daily moves. Higher volatility means larger potential gains but also larger potential losses.

Nvidia vs Taiwan Semiconductor Performance Over Time

Metric	NVDA	TSM
30 Days	4.9%	16.5%
90 Days	8.5%	34.1%
180 Days	12.3%	68.9%
1 Year	62.8%	116.9%

Shorter time frames can show different leaders as market conditions change. Consider your investment horizon when comparing performance.

Full Comparison of Nvidia vs. Taiwan Semiconductor (1-Year)

Metric	NVDA	TSM
Total Return	+62.8%	+116.9%
Annualized Volatility	43.3%	37.9%
Sharpe Ratio	1.26	2.15
Sortino Ratio	1.95	3.47
Calmar Ratio	2.58	5.13
Sterling Ratio	2.82	6.80
Treynor Ratio	0.32	0.57
Ulcer Index	8.39%	5.60%
Max Drawdown	-24.5%	-23.0%
Avg Correlation to S&P 500	0.66	0.66
5% VaR (daily log return)	-4.04%	-3.61%
5% Expected Shortfall (CVaR)	-5.98%	-4.85%
Skew	0.54	0.17
Excess kurtosis	6.46	2.30
2σ tail days (down / up)	8 / 4	6 / 4

Audit this calculation

Formulas, inputs, and conventions used to compute the metrics on this page.

Inputs & conventions

Shared window for pair metrics: 2025-02-27 → 2026-02-25 (last shared close).
Rolling correlation sample (shared closes): 220 rolling 30-day values (from 249 shared daily returns).
Annualization (days/year): NVDA: 252 days/year; TSM: 252 days/year.
Risk-free rate: Uses the 3-month U.S. Treasury yield (FRED: DGS3MO), averaged over each asset’s window:

NVDA: 4.20% over 2025-02-27 → 2026-02-25.

TSM: 4.20% over 2025-02-27 → 2026-02-25.
Volatility drag (rule of thumb): Estimated from annualized volatility (simple returns). For the log-return framing, see Log returns.

NVDA: ≈ -9.4%/yr

TSM: ≈ -7.2%/yr
Data alignment: No forward fill. Correlation and tail co-moves are computed on shared closes only.
For cross-calendar pairs (e.g., crypto vs stocks), weekend/holiday moves roll into the next shared close.
Return conventions: Volatility/Sharpe/Sortino use simple daily returns. Tail-risk uses daily log returns for distribution stats (but tables show simple returns). Log returns.

Formulas

Daily simple return

r_t = \frac{P_t}{P_{t-1}} - 1

Volatility

\sigma_{ann} = \sigma(r_t)\sqrt{A}

Volatility drag (approx.)

\text{drag} \approx \tfrac{1}{2}\sigma_{ann}^2

Sharpe Ratio

S = \frac{A\,\bar{r} - r_f}{\sigma(r_t)\sqrt{A}}

Sortino Ratio

So = \frac{A\,\bar{r} - r_f}{\sqrt{\mathbb{E}[\min(0,\,r_t - r_f/A)^2]}\,\sqrt{A}}

Maximum Drawdown

MDD = \min_t\left(\frac{P_t}{\max_{s \le t} P_s} - 1\right)

Average Correlation

\rho = \frac{\operatorname{cov}(r^A,\,r^B)}{\sigma_A\,\sigma_B}

Log returns

\ell_t = \ln\left(\frac{P_t}{P_{t-1}}\right)

Notation

$P_t$: Price on day t.
$r_t$: Simple daily return.
$\ell_t$: Log daily return.
$\bar{r}$: Average daily return.
$\sigma(r_t)$: Standard deviation of daily returns.
$A$: Annualization factor (days/year).
$r_f$: Annual risk-free rate.

Nvidia vs Taiwan Semiconductor: Frequently Asked Questions

Which has higher volatility: NVDA or TSM?

NVDA showed higher volatility at 43.3% annualized, compared to 37.9% for TSM Over the past year. Higher volatility means larger price swings in both directions.

Does NVDA provide diversification when held with TSM?

NVDA and TSM are strongly correlated over the past year, with an average correlation of 0.68. This strong correlation limits diversification benefits.

How bad are the worst 5% days for NVDA vs TSM?

Over the past year, NVDA's 5% VaR was -4.04% and its 5% Expected Shortfall was -5.98% (worst 13 days). TSM's were -3.61% and -4.85% (worst 13 days).

Do NVDA and TSM crash together on bad days?

On shared dates (n=249), when TSM has a 2σ down day, NVDA also does 66.7% (4/6 days). In the other direction, when NVDA has one, TSM also does 50.0% (4/8 days).

Which has better risk-adjusted returns: NVDA or TSM?

TSM showed better risk-adjusted performance with a Sharpe ratio of 2.15 versus NVDA's 1.26 Over the past year.

Can NVDA and TSM be combined in a portfolio?

Yes, though allocation sizing matters. Their strong correlation provides limited risk reduction since they tend to move together. NVDA's higher volatility (43.3%) means even small allocations can materially impact overall portfolio risk.