Correlation Between Foot Locker and Nio
Can any of the company-specific risk be diversified away by investing in both Foot Locker and Nio 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 Foot Locker and Nio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foot Locker and Nio Class A, you can compare the effects of market volatilities on Foot Locker and Nio 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 Foot Locker with a short position of Nio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foot Locker and Nio.
Diversification Opportunities for Foot Locker and Nio
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Foot and Nio is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Foot Locker and Nio Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nio Class A and Foot Locker 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 Foot Locker are associated (or correlated) with Nio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nio Class A has no effect on the direction of Foot Locker i.e., Foot Locker and Nio go up and down completely randomly.
Pair Corralation between Foot Locker and Nio
Allowing for the 90-day total investment horizon Foot Locker is expected to generate 0.9 times more return on investment than Nio. However, Foot Locker is 1.11 times less risky than Nio. It trades about 0.0 of its potential returns per unit of risk. Nio Class A is currently generating about -0.03 per unit of risk. If you would invest 3,642 in Foot Locker on August 27, 2024 and sell it today you would lose (1,329) from holding Foot Locker or give up 36.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foot Locker vs. Nio Class A
Performance |
| Timeline |
| Foot Locker |
| Nio Class A |
Foot Locker and Nio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foot Locker and Nio
The main advantage of trading using opposite Foot Locker and Nio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foot Locker position performs unexpectedly, Nio 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 Nio will offset losses from the drop in Nio's long position.| Foot Locker vs. Abercrombie Fitch | Foot Locker vs. Urban Outfitters | Foot Locker vs. Childrens Place | Foot Locker vs. American Eagle Outfitters |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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