Correlation Between NIKE and Goodfood Market

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

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

Diversification Opportunities for NIKE and Goodfood Market

-0.68

Correlation Coefficient

NIKE  Goodfood Market

Excellent diversification

The 3 months correlation between NIKE and Goodfood is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding NIKE Inc CDR and Goodfood Market Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodfood Market Corp 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 CDR are associated (or correlated) with Goodfood Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodfood Market Corp has no effect on the direction of NIKE i.e., NIKE and Goodfood Market go up and down completely randomly.

Pair Corralation between NIKE and Goodfood Market

Assuming the 90 days trading horizon NIKE Inc CDR is expected to under-perform the Goodfood Market. But the stock apears to be less risky and, when comparing its historical volatility, NIKE Inc CDR is 3.02 times less risky than Goodfood Market. The stock trades about -0.13 of its potential returns per unit of risk. The Goodfood Market Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  28.00  in Goodfood Market Corp on September 25, 2024 and sell it today you would earn a total of  16.00  from holding Goodfood Market Corp or generate 57.14% return on investment over 90 days.

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

NIKE Inc CDR  vs.  Goodfood Market Corp

NIKE Inc CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NIKE Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Goodfood Market Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goodfood Market Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Goodfood Market displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NIKE and Goodfood Market

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

The idea behind NIKE Inc CDR and Goodfood Market Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.