Correlation Between NIKE and Agrometal SAI
Can any of the company-specific risk be diversified away by investing in both NIKE and Agrometal SAI 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 Agrometal SAI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIKE Inc and Agrometal SAI, you can compare the effects of market volatilities on NIKE and Agrometal SAI 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 Agrometal SAI. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIKE and Agrometal SAI.
Diversification Opportunities for NIKE and Agrometal SAI
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NIKE and Agrometal is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding NIKE Inc and Agrometal SAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrometal SAI 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 Agrometal SAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agrometal SAI has no effect on the direction of NIKE i.e., NIKE and Agrometal SAI go up and down completely randomly.
Pair Corralation between NIKE and Agrometal SAI
Assuming the 90 days trading horizon NIKE is expected to generate 23.56 times less return on investment than Agrometal SAI. But when comparing it to its historical volatility, NIKE Inc is 1.71 times less risky than Agrometal SAI. It trades about 0.01 of its potential returns per unit of risk. Agrometal SAI is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,135 in Agrometal SAI on September 23, 2024 and sell it today you would earn a total of 4,665 from holding Agrometal SAI or generate 148.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NIKE Inc vs. Agrometal SAI
Performance |
| Timeline |
| NIKE Inc |
| Agrometal SAI |
NIKE and Agrometal SAI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIKE and Agrometal SAI
The main advantage of trading using opposite NIKE and Agrometal SAI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIKE position performs unexpectedly, Agrometal SAI 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 Agrometal SAI will offset losses from the drop in Agrometal SAI's long position.| NIKE vs. Agrometal SAI | NIKE vs. American Express Co | NIKE vs. QUALCOMM Incorporated | NIKE vs. United States Steel |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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