Correlation Between National Beverage and Nike
Can any of the company-specific risk be diversified away by investing in both National Beverage 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 National Beverage and Nike into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and Nike Inc, you can compare the effects of market volatilities on National Beverage 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 National Beverage with a short position of Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Nike.
Diversification Opportunities for National Beverage and Nike
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and Nike is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc and National Beverage 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 National Beverage Corp 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 National Beverage i.e., National Beverage and Nike go up and down completely randomly.
Pair Corralation between National Beverage and Nike
Assuming the 90 days horizon National Beverage Corp is expected to under-perform the Nike. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 1.27 times less risky than Nike. The stock trades about -0.08 of its potential returns per unit of risk. The Nike Inc is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 6,607 in Nike Inc on December 9, 2024 and sell it today you would earn a total of 605.00 from holding Nike Inc or generate 9.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Nike Inc
Performance |
| Timeline |
| National Beverage Corp |
| Nike Inc |
National Beverage and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Nike
The main advantage of trading using opposite National Beverage and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage 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.| National Beverage vs. ECHO INVESTMENT ZY | National Beverage vs. American Eagle Outfitters | National Beverage vs. Japan Asia Investment | National Beverage vs. Diversified Healthcare Trust |
| Nike vs. EEDUCATION ALBERT AB | Nike vs. DEVRY EDUCATION GRP | Nike vs. Perdoceo Education | Nike vs. Grand Canyon Education |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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