Correlation Between Nike and Good Vibrations
Can any of the company-specific risk be diversified away by investing in both Nike and Good Vibrations 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 Good Vibrations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and Good Vibrations Shoes, you can compare the effects of market volatilities on Nike and Good Vibrations 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 Good Vibrations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and Good Vibrations.
Diversification Opportunities for Nike and Good Vibrations
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nike and Good is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Good Vibrations Shoes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Good Vibrations Shoes 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 Good Vibrations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Good Vibrations Shoes has no effect on the direction of Nike i.e., Nike and Good Vibrations go up and down completely randomly.
Pair Corralation between Nike and Good Vibrations
Considering the 90-day investment horizon Nike Inc is expected to generate 0.2 times more return on investment than Good Vibrations. However, Nike Inc is 4.96 times less risky than Good Vibrations. It trades about -0.04 of its potential returns per unit of risk. Good Vibrations Shoes is currently generating about -0.01 per unit of risk. If you would invest 7,891 in Nike Inc on August 29, 2024 and sell it today you would lose (130.00) from holding Nike Inc or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nike Inc vs. Good Vibrations Shoes
Performance |
| Timeline |
| Nike Inc |
| Good Vibrations Shoes |
Nike and Good Vibrations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and Good Vibrations
The main advantage of trading using opposite Nike and Good Vibrations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, Good Vibrations 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 Good Vibrations will offset losses from the drop in Good Vibrations' long position.The idea behind Nike Inc and Good Vibrations Shoes 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.| Good Vibrations vs. American Rebel Holdings | Good Vibrations vs. ASICS | Good Vibrations vs. Dr Martens plc | Good Vibrations vs. American Rebel Holdings |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |