Correlation Between Nike and Nampak
Can any of the company-specific risk be diversified away by investing in both Nike and Nampak 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 Nampak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and Nampak, you can compare the effects of market volatilities on Nike and Nampak 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 Nampak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and Nampak.
Diversification Opportunities for Nike and Nampak
Excellent diversification
The 3 months correlation between Nike and Nampak is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Nampak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nampak 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 Nampak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nampak has no effect on the direction of Nike i.e., Nike and Nampak go up and down completely randomly.
Pair Corralation between Nike and Nampak
If you would invest 1,250 in Nampak on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Nampak or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.3% |
| Values | Daily Returns |
Nike Inc vs. Nampak
Performance |
| Timeline |
| Nike Inc |
| Nampak |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nike and Nampak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and Nampak
The main advantage of trading using opposite Nike and Nampak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, Nampak 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 Nampak will offset losses from the drop in Nampak's long position.The idea behind Nike Inc and Nampak 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.| Nampak vs. Nike Inc | Nampak vs. The Gap, | Nampak vs. Hooker Furniture | Nampak vs. Haverty Furniture Companies |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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