Correlation Between Nike and AMREP
Can any of the company-specific risk be diversified away by investing in both Nike and AMREP 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 AMREP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and AMREP, you can compare the effects of market volatilities on Nike and AMREP 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 AMREP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and AMREP.
Diversification Opportunities for Nike and AMREP
Very good diversification
The 3 months correlation between Nike and AMREP is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and AMREP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMREP 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 AMREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMREP has no effect on the direction of Nike i.e., Nike and AMREP go up and down completely randomly.
Pair Corralation between Nike and AMREP
Considering the 90-day investment horizon Nike is expected to generate 24.13 times less return on investment than AMREP. But when comparing it to its historical volatility, Nike Inc is 2.89 times less risky than AMREP. It trades about 0.02 of its potential returns per unit of risk. AMREP is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 3,000 in AMREP on August 28, 2024 and sell it today you would earn a total of 491.00 from holding AMREP or generate 16.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nike Inc vs. AMREP
Performance |
| Timeline |
| Nike Inc |
| AMREP |
Nike and AMREP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and AMREP
The main advantage of trading using opposite Nike and AMREP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, AMREP 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 AMREP will offset losses from the drop in AMREP's long position.The idea behind Nike Inc and AMREP 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.| AMREP vs. Park Electrochemical | AMREP vs. Innovative Solutions and | AMREP vs. Curtiss Wright | AMREP vs. National Presto Industries |
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.
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