Correlation Between NIKE and Focus Home
Can any of the company-specific risk be diversified away by investing in both NIKE and Focus Home 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 Focus Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIKE Inc and Focus Home Interactive, you can compare the effects of market volatilities on NIKE and Focus Home 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 Focus Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIKE and Focus Home.
Diversification Opportunities for NIKE and Focus Home
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NIKE and Focus is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding NIKE Inc and Focus Home Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Home Interactive 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 Focus Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Home Interactive has no effect on the direction of NIKE i.e., NIKE and Focus Home go up and down completely randomly.
Pair Corralation between NIKE and Focus Home
Assuming the 90 days trading horizon NIKE Inc is expected to generate 0.42 times more return on investment than Focus Home. However, NIKE Inc is 2.4 times less risky than Focus Home. It trades about -0.03 of its potential returns per unit of risk. Focus Home Interactive is currently generating about -0.02 per unit of risk. If you would invest 10,580 in NIKE Inc on September 20, 2024 and sell it today you would lose (3,175) from holding NIKE Inc or give up 30.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
NIKE Inc vs. Focus Home Interactive
Performance |
| Timeline |
| NIKE Inc |
| Focus Home Interactive |
NIKE and Focus Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIKE and Focus Home
The main advantage of trading using opposite NIKE and Focus Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIKE position performs unexpectedly, Focus Home 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 Focus Home will offset losses from the drop in Focus Home's long position.| NIKE vs. Focus Home Interactive | NIKE vs. Q2M Managementberatung AG | NIKE vs. Jupiter Fund Management | NIKE vs. INVITATION HOMES DL |
| Focus Home vs. NEXON Co | Focus Home vs. Take Two Interactive Software | Focus Home vs. Superior Plus Corp | Focus Home vs. SIVERS SEMICONDUCTORS AB |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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