Correlation Between Good Vibrations and Adidas AG
Can any of the company-specific risk be diversified away by investing in both Good Vibrations and Adidas AG 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 Good Vibrations and Adidas AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Good Vibrations Shoes and Adidas AG ADR, you can compare the effects of market volatilities on Good Vibrations and Adidas AG 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 Good Vibrations with a short position of Adidas AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Good Vibrations and Adidas AG.
Diversification Opportunities for Good Vibrations and Adidas AG
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Good and Adidas is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Good Vibrations Shoes and Adidas AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adidas AG ADR and Good Vibrations 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 Good Vibrations Shoes are associated (or correlated) with Adidas AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adidas AG ADR has no effect on the direction of Good Vibrations i.e., Good Vibrations and Adidas AG go up and down completely randomly.
Pair Corralation between Good Vibrations and Adidas AG
Given the investment horizon of 90 days Good Vibrations Shoes is expected to generate 4.53 times more return on investment than Adidas AG. However, Good Vibrations is 4.53 times more volatile than Adidas AG ADR. It trades about 0.06 of its potential returns per unit of risk. Adidas AG ADR is currently generating about -0.02 per unit of risk. If you would invest 0.19 in Good Vibrations Shoes on August 31, 2024 and sell it today you would earn a total of 0.04 from holding Good Vibrations Shoes or generate 21.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Good Vibrations Shoes vs. Adidas AG ADR
Performance |
| Timeline |
| Good Vibrations Shoes |
| Adidas AG ADR |
Good Vibrations and Adidas AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Good Vibrations and Adidas AG
The main advantage of trading using opposite Good Vibrations and Adidas AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Good Vibrations position performs unexpectedly, Adidas AG 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 Adidas AG will offset losses from the drop in Adidas AG's long position.| Good Vibrations vs. American Rebel Holdings | Good Vibrations vs. ASICS | Good Vibrations vs. Dr Martens plc | Good Vibrations vs. American Rebel Holdings |
| Adidas AG vs. Asics Corp ADR | Adidas AG vs. American Rebel Holdings | Adidas AG vs. American Rebel Holdings | Adidas AG vs. Crocs 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 CEOs Directory module to screen CEOs from public companies around the world.
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