Correlation Between NIKE and Livetech
Can any of the company-specific risk be diversified away by investing in both NIKE and Livetech 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 NIKE and Livetech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIKE Inc and Livetech da Bahia, you can compare the effects of market volatilities on NIKE and Livetech 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 NIKE with a short position of Livetech. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIKE and Livetech.
Diversification Opportunities for NIKE and Livetech
Very good diversification
The 3 months correlation between NIKE and Livetech is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding NIKE Inc and Livetech da Bahia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livetech da Bahia and NIKE 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 NIKE Inc are associated (or correlated) with Livetech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livetech da Bahia has no effect on the direction of NIKE i.e., NIKE and Livetech go up and down completely randomly.
Pair Corralation between NIKE and Livetech
Assuming the 90 days trading horizon NIKE Inc is not expected to generate positive returns. However, NIKE Inc is 1.2 times less risky than Livetech. It waists most of its returns potential to compensate for thr risk taken. Livetech is generating about -0.07 per unit of risk. If you would invest 5,233 in NIKE Inc on September 19, 2024 and sell it today you would lose (438.00) from holding NIKE Inc or give up 8.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.75% |
| Values | Daily Returns |
NIKE Inc vs. Livetech da Bahia
Performance |
| Timeline |
| NIKE Inc |
| Livetech da Bahia |
NIKE and Livetech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIKE and Livetech
The main advantage of trading using opposite NIKE and Livetech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIKE position performs unexpectedly, Livetech 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 Livetech will offset losses from the drop in Livetech's long position.| NIKE vs. Livetech da Bahia | NIKE vs. Unity Software | NIKE vs. Bread Financial Holdings | NIKE vs. Sumitomo Mitsui Financial |
| Livetech vs. T Mobile | Livetech vs. Verizon Communications | Livetech vs. Vodafone Group Public | Livetech vs. Fundo Investimento Imobiliario |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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