Correlation Between Nike and Mill City
Can any of the company-specific risk be diversified away by investing in both Nike and Mill City 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 Mill City into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and Mill City Ventures, you can compare the effects of market volatilities on Nike and Mill City 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 Mill City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and Mill City.
Diversification Opportunities for Nike and Mill City
Modest diversification
The 3 months correlation between Nike and Mill is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Mill City Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mill City Ventures 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 Mill City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mill City Ventures has no effect on the direction of Nike i.e., Nike and Mill City go up and down completely randomly.
Pair Corralation between Nike and Mill City
Considering the 90-day investment horizon Nike Inc is expected to generate 0.41 times more return on investment than Mill City. However, Nike Inc is 2.43 times less risky than Mill City. It trades about 0.03 of its potential returns per unit of risk. Mill City Ventures is currently generating about -0.03 per unit of risk. If you would invest 7,806 in Nike Inc on September 2, 2024 and sell it today you would earn a total of 71.00 from holding Nike Inc or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nike Inc vs. Mill City Ventures
Performance |
| Timeline |
| Nike Inc |
| Mill City Ventures |
Nike and Mill City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and Mill City
The main advantage of trading using opposite Nike and Mill City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, Mill City 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 Mill City will offset losses from the drop in Mill City's long position.The idea behind Nike Inc and Mill City Ventures 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.| Mill City vs. Consumer Portfolio Services | Mill City vs. Atlanticus Holdings Corp | Mill City vs. Nelnet Inc | Mill City vs. Senmiao Technology |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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