Correlation Between Nike and Alfi

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Can any of the company-specific risk be diversified away by investing in both Nike and Alfi 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 Alfi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and Alfi Inc, you can compare the effects of market volatilities on Nike and Alfi 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 Alfi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and Alfi.

Diversification Opportunities for Nike and Alfi

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Nike and Alfi is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Alfi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfi Inc 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 Alfi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfi Inc has no effect on the direction of Nike i.e., Nike and Alfi go up and down completely randomly.

Pair Corralation between Nike and Alfi

Considering the 90-day investment horizon Nike Inc is expected to under-perform the Alfi. But the stock apears to be less risky and, when comparing its historical volatility, Nike Inc is 5.44 times less risky than Alfi. The stock trades about -0.02 of its potential returns per unit of risk. The Alfi Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  290.00  in Alfi Inc on June 29, 2022 and sell it today you would lose (199.00)  from holding Alfi Inc or give up 68.62% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy71.23%
ValuesDaily Returns

Nike Inc  vs.  Alfi Inc

 Performance (%) 
       Timeline  
Nike Inc 
Nike Performance
0 of 100
Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Nike is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Nike Price Channel

Alfi Inc 
Alfi Performance
0 of 100
Over the last 90 days Alfi Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in October 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Alfi Price Channel

Nike and Alfi Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nike and Alfi

The main advantage of trading using opposite Nike and Alfi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, Alfi 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 Alfi will offset losses from the drop in Alfi's long position.
Nike vs. Kibush Capital Corp
The idea behind Nike Inc and Alfi 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.
Alfi vs. Kibush Capital Corp
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 Watchlist Optimization module to optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm.

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