Correlation Between Falcon Energy and NIKE
Can any of the company-specific risk be diversified away by investing in both Falcon Energy 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 Falcon Energy and NIKE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Energy Materials and NIKE Inc CDR, you can compare the effects of market volatilities on Falcon Energy 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 Falcon Energy with a short position of NIKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Energy and NIKE.
Diversification Opportunities for Falcon Energy and NIKE
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Falcon and NIKE is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Energy Materials 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 Falcon Energy 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 Falcon Energy Materials 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 Falcon Energy i.e., Falcon Energy and NIKE go up and down completely randomly.
Pair Corralation between Falcon Energy and NIKE
Assuming the 90 days trading horizon Falcon Energy Materials is expected to generate 2.29 times more return on investment than NIKE. However, Falcon Energy is 2.29 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 0.02 per unit of risk. If you would invest 68.00 in Falcon Energy Materials on September 12, 2024 and sell it today you would earn a total of 2.00 from holding Falcon Energy Materials or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Energy Materials vs. NIKE Inc CDR
Performance |
| Timeline |
| Falcon Energy Materials |
| NIKE Inc CDR |
Falcon Energy and NIKE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Energy and NIKE
The main advantage of trading using opposite Falcon Energy and NIKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Energy 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.| Falcon Energy vs. Income Financial Trust | Falcon Energy vs. First National Financial | Falcon Energy vs. Nicola Mining | Falcon Energy vs. Aya Gold Silver |
| NIKE vs. Berkshire Hathaway CDR | NIKE vs. JPMorgan Chase Co | NIKE vs. Bank of America | NIKE vs. Alphabet Inc CDR |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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