Correlation Between United States and NIKE
Can any of the company-specific risk be diversified away by investing in both United States and NIKE 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 United States and NIKE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and NIKE Inc, you can compare the effects of market volatilities on United States and NIKE 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 United States with a short position of NIKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and NIKE.
Diversification Opportunities for United States and NIKE
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and NIKE is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and NIKE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIKE Inc and United States 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 United States Steel are associated (or correlated) with NIKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIKE Inc has no effect on the direction of United States i.e., United States and NIKE go up and down completely randomly.
Pair Corralation between United States and NIKE
Given the investment horizon of 90 days United States Steel is expected to under-perform the NIKE. In addition to that, United States is 2.11 times more volatile than NIKE Inc. It trades about -0.19 of its total potential returns per unit of risk. NIKE Inc is currently generating about 0.04 per unit of volatility. If you would invest 734,997 in NIKE Inc on September 24, 2024 and sell it today you would earn a total of 7,003 from holding NIKE Inc or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
United States Steel vs. NIKE Inc
Performance |
| Timeline |
| United States Steel |
| NIKE Inc |
United States and NIKE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and NIKE
The main advantage of trading using opposite United States and NIKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, NIKE 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 NIKE will offset losses from the drop in NIKE's long position.| United States vs. Telecom Argentina | United States vs. Compania de Transporte | United States vs. Agrometal SAI |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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