Correlation Between NIKE and Black Iron
Can any of the company-specific risk be diversified away by investing in both NIKE and Black Iron 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 Black Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIKE Inc CDR and Black Iron, you can compare the effects of market volatilities on NIKE and Black Iron 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 Black Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIKE and Black Iron.
Diversification Opportunities for NIKE and Black Iron
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NIKE and Black is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding NIKE Inc CDR and Black Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Iron 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 CDR are associated (or correlated) with Black Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Iron has no effect on the direction of NIKE i.e., NIKE and Black Iron go up and down completely randomly.
Pair Corralation between NIKE and Black Iron
Assuming the 90 days trading horizon NIKE is expected to generate 8.18 times less return on investment than Black Iron. But when comparing it to its historical volatility, NIKE Inc CDR is 7.65 times less risky than Black Iron. It trades about 0.13 of its potential returns per unit of risk. Black Iron is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Black Iron on November 3, 2024 and sell it today you would earn a total of 3.00 from holding Black Iron or generate 23.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NIKE Inc CDR vs. Black Iron
Performance |
| Timeline |
| NIKE Inc CDR |
| Black Iron |
NIKE and Black Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIKE and Black Iron
The main advantage of trading using opposite NIKE and Black Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIKE position performs unexpectedly, Black Iron 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 Black Iron will offset losses from the drop in Black Iron's long position.| NIKE vs. Globex Mining Enterprises | NIKE vs. Leading Edge Materials | NIKE vs. Cogeco Communications | NIKE vs. Doman Building Materials |
| Black Iron vs. Northcliff Resources | Black Iron vs. St Augustine Gold | Black Iron vs. Mammoth Resources Corp | Black Iron vs. Black Widow Resources |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Global Correlations Find global opportunities by holding instruments from different markets |