Correlation Between Nike and Thunder Power
Can any of the company-specific risk be diversified away by investing in both Nike and Thunder 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 Thunder 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 Thunder Power Holdings,, you can compare the effects of market volatilities on Nike and Thunder 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 Thunder Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and Thunder Power.
Diversification Opportunities for Nike and Thunder Power
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nike and Thunder is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Thunder Power Holdings, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunder Power Holdings, 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 Thunder Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunder Power Holdings, has no effect on the direction of Nike i.e., Nike and Thunder Power go up and down completely randomly.
Pair Corralation between Nike and Thunder Power
Considering the 90-day investment horizon Nike Inc is expected to generate 0.24 times more return on investment than Thunder Power. However, Nike Inc is 4.23 times less risky than Thunder Power. It trades about -0.06 of its potential returns per unit of risk. Thunder Power Holdings, is currently generating about -0.09 per unit of risk. If you would invest 11,344 in Nike Inc on September 2, 2024 and sell it today you would lose (3,467) from holding Nike Inc or give up 30.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nike Inc vs. Thunder Power Holdings,
Performance |
| Timeline |
| Nike Inc |
| Thunder Power Holdings, |
Nike and Thunder Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and Thunder Power
The main advantage of trading using opposite Nike and Thunder Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, Thunder 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 Thunder Power will offset losses from the drop in Thunder Power's long position.The idea behind Nike Inc and Thunder Power Holdings, 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.| Thunder Power vs. Mativ Holdings | Thunder Power vs. Summit Materials | Thunder Power vs. Sensient Technologies | Thunder Power vs. Lion One Metals |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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