Correlation Between Nike and One Gas
Can any of the company-specific risk be diversified away by investing in both Nike and One Gas 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 One Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and One Gas, you can compare the effects of market volatilities on Nike and One Gas 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 One Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and One Gas.
Diversification Opportunities for Nike and One Gas
Good diversification
The 3 months correlation between Nike and One is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and One Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Gas 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 One Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Gas has no effect on the direction of Nike i.e., Nike and One Gas go up and down completely randomly.
Pair Corralation between Nike and One Gas
Considering the 90-day investment horizon Nike is expected to generate 3.88 times less return on investment than One Gas. But when comparing it to its historical volatility, Nike Inc is 1.03 times less risky than One Gas. It trades about 0.08 of its potential returns per unit of risk. One Gas is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 6,937 in One Gas on September 4, 2024 and sell it today you would earn a total of 741.00 from holding One Gas or generate 10.68% 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. One Gas
Performance |
| Timeline |
| Nike Inc |
| One Gas |
Nike and One Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and One Gas
The main advantage of trading using opposite Nike and One Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, One Gas 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 One Gas will offset losses from the drop in One Gas' long position.The idea behind Nike Inc and One Gas 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.| One Gas vs. Northwest Natural Gas | One Gas vs. Chesapeake Utilities | One Gas vs. NewJersey Resources | One Gas vs. RGC Resources |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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