Correlation Between NIKE and Telecomunicaes Brasileiras
Can any of the company-specific risk be diversified away by investing in both NIKE and Telecomunicaes Brasileiras 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 Telecomunicaes Brasileiras into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIKE Inc and Telecomunicaes Brasileiras SA, you can compare the effects of market volatilities on NIKE and Telecomunicaes Brasileiras 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 Telecomunicaes Brasileiras. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIKE and Telecomunicaes Brasileiras.
Diversification Opportunities for NIKE and Telecomunicaes Brasileiras
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NIKE and Telecomunicaes is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NIKE Inc and Telecomunicaes Brasileiras SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecomunicaes Brasileiras 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 Telecomunicaes Brasileiras. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecomunicaes Brasileiras has no effect on the direction of NIKE i.e., NIKE and Telecomunicaes Brasileiras go up and down completely randomly.
Pair Corralation between NIKE and Telecomunicaes Brasileiras
Assuming the 90 days trading horizon NIKE Inc is expected to generate 0.54 times more return on investment than Telecomunicaes Brasileiras. However, NIKE Inc is 1.85 times less risky than Telecomunicaes Brasileiras. It trades about 0.31 of its potential returns per unit of risk. Telecomunicaes Brasileiras SA is currently generating about -0.12 per unit of risk. If you would invest 4,315 in NIKE Inc on September 20, 2024 and sell it today you would earn a total of 522.00 from holding NIKE Inc or generate 12.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
NIKE Inc vs. Telecomunicaes Brasileiras SA
Performance |
| Timeline |
| NIKE Inc |
| Telecomunicaes Brasileiras |
NIKE and Telecomunicaes Brasileiras Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIKE and Telecomunicaes Brasileiras
The main advantage of trading using opposite NIKE and Telecomunicaes Brasileiras positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIKE position performs unexpectedly, Telecomunicaes Brasileiras 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 Telecomunicaes Brasileiras will offset losses from the drop in Telecomunicaes Brasileiras' long position.| NIKE vs. Telecomunicaes Brasileiras SA | NIKE vs. Cognizant Technology Solutions | NIKE vs. G2D Investments | NIKE vs. Charter Communications |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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