Correlation Between Globalfoundries and Nike
Can any of the company-specific risk be diversified away by investing in both Globalfoundries 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 Globalfoundries and Nike into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globalfoundries and Nike Inc, you can compare the effects of market volatilities on Globalfoundries 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 Globalfoundries with a short position of Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globalfoundries and Nike.
Diversification Opportunities for Globalfoundries and Nike
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Globalfoundries and Nike is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc and Globalfoundries 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 Globalfoundries 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 Globalfoundries i.e., Globalfoundries and Nike go up and down completely randomly.
Pair Corralation between Globalfoundries and Nike
Considering the 90-day investment horizon Globalfoundries is expected to generate 1.27 times more return on investment than Nike. However, Globalfoundries is 1.27 times more volatile than Nike Inc. It trades about -0.02 of its potential returns per unit of risk. Nike Inc is currently generating about -0.06 per unit of risk. If you would invest 5,276 in Globalfoundries on September 2, 2024 and sell it today you would lose (951.00) from holding Globalfoundries or give up 18.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globalfoundries vs. Nike Inc
Performance |
| Timeline |
| Globalfoundries |
| Nike Inc |
Globalfoundries and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globalfoundries and Nike
The main advantage of trading using opposite Globalfoundries and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalfoundries 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.| Globalfoundries vs. NXP Semiconductors NV | Globalfoundries vs. Analog Devices | Globalfoundries vs. ON Semiconductor | Globalfoundries vs. Lattice Semiconductor |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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