Correlation Between GMxico Transportes and NIKE

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

By analyzing existing cross correlation between GMxico Transportes SAB and NIKE Inc, you can compare the effects of market volatilities on GMxico Transportes 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 GMxico Transportes with a short position of NIKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMxico Transportes and NIKE.

Diversification Opportunities for GMxico Transportes and NIKE

-0.04

Correlation Coefficient

GMxico Transportes  NIKE

Good diversification

The 3 months correlation between GMxico and NIKE is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding GMxico Transportes SAB and NIKE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIKE Inc and GMxico Transportes 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 GMxico Transportes SAB 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 GMxico Transportes i.e., GMxico Transportes and NIKE go up and down completely randomly.

Pair Corralation between GMxico Transportes and NIKE

Assuming the 90 days trading horizon GMxico Transportes SAB is expected to under-perform the NIKE. But the stock apears to be less risky and, when comparing its historical volatility, GMxico Transportes SAB is 1.09 times less risky than NIKE. The stock trades about -0.11 of its potential returns per unit of risk. The NIKE Inc is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  154,519  in NIKE Inc on October 25, 2024 and sell it today you would lose (2,840) from holding NIKE Inc or give up 1.84% of portfolio value over 90 days.

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

GMxico Transportes SAB  vs.  NIKE Inc

GMxico Transportes SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GMxico Transportes SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, GMxico Transportes is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

NIKE Inc

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. In spite of fairly strong technical and fundamental indicators, NIKE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GMxico Transportes and NIKE

The main advantage of trading using opposite GMxico Transportes and NIKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMxico Transportes 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.

The idea behind GMxico Transportes SAB 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.