Correlation Between AMCON Distributing and 654106AH6

Can any of the company-specific risk be diversified away by investing in both AMCON Distributing and 654106AH6 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 AMCON Distributing and 654106AH6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AMCON Distributing and NIKE INC, you can compare the effects of market volatilities on AMCON Distributing and 654106AH6 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 AMCON Distributing with a short position of 654106AH6. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMCON Distributing and 654106AH6.

Diversification Opportunities for AMCON Distributing and 654106AH6

-0.13

Correlation Coefficient

AMCON Distributing  654106AH6

Good diversification

The 3 months correlation between AMCON and 654106AH6 is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and NIKE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 654106AH6 and AMCON Distributing 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 AMCON Distributing are associated (or correlated) with 654106AH6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 654106AH6 has no effect on the direction of AMCON Distributing i.e., AMCON Distributing and 654106AH6 go up and down completely randomly.

Pair Corralation between AMCON Distributing and 654106AH6

Considering the 90-day investment horizon AMCON Distributing is expected to generate 7.94 times more return on investment than 654106AH6. However, AMCON Distributing is 7.94 times more volatile than NIKE INC. It trades about -0.01 of its potential returns per unit of risk. NIKE INC is currently generating about -0.09 per unit of risk. If you would invest  14,474  in AMCON Distributing on September 28, 2024 and sell it today you would lose (924.00) from holding AMCON Distributing or give up 6.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

AMCON Distributing  vs.  NIKE INC

AMCON Distributing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMCON Distributing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, AMCON Distributing is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

654106AH6

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NIKE INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 654106AH6 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AMCON Distributing and 654106AH6

The main advantage of trading using opposite AMCON Distributing and 654106AH6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMCON Distributing position performs unexpectedly, 654106AH6 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 654106AH6 will offset losses from the drop in 654106AH6's long position.

The idea behind AMCON Distributing and NIKE INC 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.