Correlation Between Nike and Summa Silver
Can any of the company-specific risk be diversified away by investing in both Nike and Summa Silver 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 Summa Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and Summa Silver Corp, you can compare the effects of market volatilities on Nike and Summa Silver 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 Summa Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and Summa Silver.
Diversification Opportunities for Nike and Summa Silver
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nike and Summa is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Summa Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summa Silver Corp 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 Summa Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summa Silver Corp has no effect on the direction of Nike i.e., Nike and Summa Silver go up and down completely randomly.
Pair Corralation between Nike and Summa Silver
Considering the 90-day investment horizon Nike Inc is expected to generate 0.42 times more return on investment than Summa Silver. However, Nike Inc is 2.38 times less risky than Summa Silver. It trades about 0.01 of its potential returns per unit of risk. Summa Silver Corp is currently generating about -0.1 per unit of risk. If you would invest 7,861 in Nike Inc on September 13, 2024 and sell it today you would earn a total of 24.00 from holding Nike Inc or generate 0.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nike Inc vs. Summa Silver Corp
Performance |
| Timeline |
| Nike Inc |
| Summa Silver Corp |
Nike and Summa Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and Summa Silver
The main advantage of trading using opposite Nike and Summa Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, Summa Silver 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 Summa Silver will offset losses from the drop in Summa Silver's long position.The idea behind Nike Inc and Summa Silver Corp 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.| Summa Silver vs. P2 Gold | Summa Silver vs. Enduro Metals | Summa Silver vs. Kodiak Copper Corp | Summa Silver vs. Mirasol 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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