Correlation Between AVITA Medical and Nike
Can any of the company-specific risk be diversified away by investing in both AVITA Medical and Nike 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 AVITA Medical and Nike into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVITA Medical and Nike Inc, you can compare the effects of market volatilities on AVITA Medical and Nike 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 AVITA Medical with a short position of Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVITA Medical and Nike.
Diversification Opportunities for AVITA Medical and Nike
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AVITA and Nike is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc and AVITA Medical 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 AVITA Medical are associated (or correlated) with Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of AVITA Medical i.e., AVITA Medical and Nike go up and down completely randomly.
Pair Corralation between AVITA Medical and Nike
Assuming the 90 days trading horizon AVITA Medical is expected to generate 2.36 times more return on investment than Nike. However, AVITA Medical is 2.36 times more volatile than Nike Inc. It trades about 0.05 of its potential returns per unit of risk. Nike Inc is currently generating about -0.03 per unit of risk. If you would invest 123.00 in AVITA Medical on September 20, 2024 and sell it today you would earn a total of 107.00 from holding AVITA Medical or generate 86.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
AVITA Medical vs. Nike Inc
Performance |
| Timeline |
| AVITA Medical |
| Nike Inc |
AVITA Medical and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVITA Medical and Nike
The main advantage of trading using opposite AVITA Medical and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVITA Medical position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike's long position.| AVITA Medical vs. MHP Hotel AG | AVITA Medical vs. Hyatt Hotels | AVITA Medical vs. DISTRICT METALS | AVITA Medical vs. Jacquet Metal Service |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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