Correlation Between Nike and Evolution Mining
Can any of the company-specific risk be diversified away by investing in both Nike and Evolution Mining 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 Evolution Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and Evolution Mining, you can compare the effects of market volatilities on Nike and Evolution Mining 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 Evolution Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and Evolution Mining.
Diversification Opportunities for Nike and Evolution Mining
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nike and Evolution is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Evolution Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining 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 Evolution Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Mining has no effect on the direction of Nike i.e., Nike and Evolution Mining go up and down completely randomly.
Pair Corralation between Nike and Evolution Mining
Considering the 90-day investment horizon Nike Inc is expected to generate 0.48 times more return on investment than Evolution Mining. However, Nike Inc is 2.07 times less risky than Evolution Mining. It trades about 0.07 of its potential returns per unit of risk. Evolution Mining is currently generating about 0.02 per unit of risk. If you would invest 7,713 in Nike Inc on September 1, 2024 and sell it today you would earn a total of 164.00 from holding Nike Inc or generate 2.13% 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. Evolution Mining
Performance |
| Timeline |
| Nike Inc |
| Evolution Mining |
Nike and Evolution Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and Evolution Mining
The main advantage of trading using opposite Nike and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, Evolution Mining 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 Evolution Mining will offset losses from the drop in Evolution Mining's long position.The idea behind Nike Inc and Evolution Mining 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.| Evolution Mining vs. Regis Resources | Evolution Mining vs. West African Resources | Evolution Mining vs. Allegiant Gold | Evolution Mining vs. Minaurum Gold |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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