Correlation Between Gold Fields and NIKE
Can any of the company-specific risk be diversified away by investing in both Gold Fields 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 Gold Fields and NIKE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Fields Ltd and NIKE Inc, you can compare the effects of market volatilities on Gold Fields 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 Gold Fields with a short position of NIKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and NIKE.
Diversification Opportunities for Gold Fields and NIKE
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gold and NIKE is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and NIKE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIKE Inc and Gold Fields 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 Gold Fields Ltd 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 Gold Fields i.e., Gold Fields and NIKE go up and down completely randomly.
Pair Corralation between Gold Fields and NIKE
Assuming the 90 days trading horizon Gold Fields Ltd is expected to under-perform the NIKE. In addition to that, Gold Fields is 1.43 times more volatile than NIKE Inc. It trades about -0.26 of its total potential returns per unit of risk. NIKE Inc is currently generating about -0.09 per unit of volatility. If you would invest 813,000 in NIKE Inc on September 19, 2024 and sell it today you would lose (63,000) from holding NIKE Inc or give up 7.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Fields Ltd vs. NIKE Inc
Performance |
| Timeline |
| Gold Fields |
| NIKE Inc |
Gold Fields and NIKE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and NIKE
The main advantage of trading using opposite Gold Fields and NIKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields 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.| Gold Fields vs. Alibaba Group Holding | Gold Fields vs. Apple Inc DRC | Gold Fields vs. Alphabet Inc Class A CEDEAR | Gold Fields vs. Amazon Inc |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |