Correlation Between NIKE and Grimoldi

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

By analyzing existing cross correlation between NIKE Inc and Grimoldi SA, you can compare the effects of market volatilities on NIKE and Grimoldi 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 Grimoldi. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIKE and Grimoldi.

Diversification Opportunities for NIKE and Grimoldi

-0.29

Correlation Coefficient

NIKE  Grimoldi

Very good diversification

The 3 months correlation between NIKE and Grimoldi is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding NIKE Inc and Grimoldi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grimoldi SA 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 Grimoldi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grimoldi SA has no effect on the direction of NIKE i.e., NIKE and Grimoldi go up and down completely randomly.

Pair Corralation between NIKE and Grimoldi

Assuming the 90 days trading horizon NIKE is expected to generate 2.56 times less return on investment than Grimoldi. But when comparing it to its historical volatility, NIKE Inc is 1.21 times less risky than Grimoldi. It trades about 0.06 of its potential returns per unit of risk. Grimoldi SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  23,817  in Grimoldi SA on October 11, 2024 and sell it today you would earn a total of  116,183  from holding Grimoldi SA or generate 487.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

NIKE Inc  vs.  Grimoldi SA

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. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Grimoldi SA

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grimoldi SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Grimoldi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NIKE and Grimoldi

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

The idea behind NIKE Inc and Grimoldi SA 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.