Correlation Between Advanced Micro and NIKE
Can any of the company-specific risk be diversified away by investing in both Advanced Micro 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 Advanced Micro and NIKE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Micro Devices and NIKE Inc CDR, you can compare the effects of market volatilities on Advanced Micro 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 Advanced Micro with a short position of NIKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Micro and NIKE.
Diversification Opportunities for Advanced Micro and NIKE
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Advanced and NIKE is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and NIKE Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIKE Inc CDR and Advanced Micro 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 Advanced Micro Devices 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 CDR has no effect on the direction of Advanced Micro i.e., Advanced Micro and NIKE go up and down completely randomly.
Pair Corralation between Advanced Micro and NIKE
Assuming the 90 days trading horizon Advanced Micro Devices is expected to generate 1.47 times more return on investment than NIKE. However, Advanced Micro is 1.47 times more volatile than NIKE Inc CDR. It trades about 0.03 of its potential returns per unit of risk. NIKE Inc CDR is currently generating about -0.03 per unit of risk. If you would invest 2,295 in Advanced Micro Devices on August 27, 2024 and sell it today you would earn a total of 331.00 from holding Advanced Micro Devices or generate 14.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Micro Devices vs. NIKE Inc CDR
Performance |
| Timeline |
| Advanced Micro Devices |
| NIKE Inc CDR |
Advanced Micro and NIKE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Micro and NIKE
The main advantage of trading using opposite Advanced Micro and NIKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Micro 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.| Advanced Micro vs. Bausch Health Companies | Advanced Micro vs. Birchtech Corp | Advanced Micro vs. Leveljump Healthcare Corp | Advanced Micro vs. Jamieson Wellness |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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