Correlation Between NIKE and Grupo Carso

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

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

Diversification Opportunities for NIKE and Grupo Carso

0.42

Correlation Coefficient

NIKE  Grupo Carso

Very weak diversification

The 3 months correlation between NIKE and Grupo is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding NIKE Inc and Grupo Carso SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Carso SAB 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 Grupo Carso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Carso SAB has no effect on the direction of NIKE i.e., NIKE and Grupo Carso go up and down completely randomly.

Pair Corralation between NIKE and Grupo Carso

Assuming the 90 days trading horizon NIKE Inc is expected to generate 1.02 times more return on investment than Grupo Carso. However, NIKE is 1.02 times more volatile than Grupo Carso SAB. It trades about 0.01 of its potential returns per unit of risk. Grupo Carso SAB is currently generating about 0.0 per unit of risk. If you would invest  156,693  in NIKE Inc on September 18, 2024 and sell it today you would lose (654.00) from holding NIKE Inc or give up 0.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

NIKE Inc  vs.  Grupo Carso SAB

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Grupo Carso SAB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NIKE and Grupo Carso

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

The idea behind NIKE Inc and Grupo Carso SAB 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.