Correlation Between Nike and CurrentC Power
Can any of the company-specific risk be diversified away by investing in both Nike and CurrentC Power 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 CurrentC Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and CurrentC Power, you can compare the effects of market volatilities on Nike and CurrentC Power 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 CurrentC Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and CurrentC Power.
Diversification Opportunities for Nike and CurrentC Power
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nike and CurrentC is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and CurrentC Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CurrentC Power 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 CurrentC Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CurrentC Power has no effect on the direction of Nike i.e., Nike and CurrentC Power go up and down completely randomly.
Pair Corralation between Nike and CurrentC Power
Considering the 90-day investment horizon Nike Inc is expected to under-perform the CurrentC Power. But the stock apears to be less risky and, when comparing its historical volatility, Nike Inc is 19.27 times less risky than CurrentC Power. The stock trades about -0.2 of its potential returns per unit of risk. The CurrentC Power is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 12.00 in CurrentC Power on August 24, 2024 and sell it today you would earn a total of 11.00 from holding CurrentC Power or generate 91.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Nike Inc vs. CurrentC Power
Performance |
| Timeline |
| Nike Inc |
| CurrentC Power |
Nike and CurrentC Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and CurrentC Power
The main advantage of trading using opposite Nike and CurrentC Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, CurrentC Power 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 CurrentC Power will offset losses from the drop in CurrentC Power's long position.The idea behind Nike Inc and CurrentC Power pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CurrentC Power vs. Zhihu Inc ADR | CurrentC Power vs. Postal Realty Trust | CurrentC Power vs. Nike Inc | CurrentC Power vs. Eastern Co |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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