Correlation Between Digilife Technologies and Nike
Can any of the company-specific risk be diversified away by investing in both Digilife Technologies 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 Digilife Technologies and Nike into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digilife Technologies Limited and Nike Inc, you can compare the effects of market volatilities on Digilife Technologies 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 Digilife Technologies with a short position of Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digilife Technologies and Nike.
Diversification Opportunities for Digilife Technologies and Nike
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Digilife and Nike is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Digilife Technologies Limited and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc and Digilife Technologies 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 Digilife Technologies Limited 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 Digilife Technologies i.e., Digilife Technologies and Nike go up and down completely randomly.
Pair Corralation between Digilife Technologies and Nike
Assuming the 90 days trading horizon Digilife Technologies Limited is expected to under-perform the Nike. In addition to that, Digilife Technologies is 1.51 times more volatile than Nike Inc. It trades about -0.02 of its total potential returns per unit of risk. Nike Inc is currently generating about 0.14 per unit of volatility. If you would invest 7,130 in Nike Inc on September 22, 2024 and sell it today you would earn a total of 322.00 from holding Nike Inc or generate 4.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digilife Technologies Limited vs. Nike Inc
Performance |
| Timeline |
| Digilife Technologies |
| Nike Inc |
Digilife Technologies and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digilife Technologies and Nike
The main advantage of trading using opposite Digilife Technologies and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digilife Technologies 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.| Digilife Technologies vs. The Trade Desk | Digilife Technologies vs. Cardinal Health | Digilife Technologies vs. Salesforce | Digilife Technologies vs. HEALTHCARE REAL A |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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