Correlation Between American Public and Nike
Can any of the company-specific risk be diversified away by investing in both American Public 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 American Public and Nike into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Public Education and Nike Inc, you can compare the effects of market volatilities on American Public 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 American Public with a short position of Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Public and Nike.
Diversification Opportunities for American Public and Nike
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Nike is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding American Public Education and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc and American Public 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 American Public Education 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 American Public i.e., American Public and Nike go up and down completely randomly.
Pair Corralation between American Public and Nike
Assuming the 90 days horizon American Public Education is expected to generate 2.64 times more return on investment than Nike. However, American Public is 2.64 times more volatile than Nike Inc. It trades about 0.05 of its potential returns per unit of risk. Nike Inc is currently generating about -0.03 per unit of risk. If you would invest 1,160 in American Public Education on November 5, 2024 and sell it today you would earn a total of 920.00 from holding American Public Education or generate 79.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Public Education vs. Nike Inc
Performance |
| Timeline |
| American Public Education |
| Nike Inc |
American Public and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Public and Nike
The main advantage of trading using opposite American Public and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Public 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.| American Public vs. Laureate Education | American Public vs. DeVry Education Group | American Public vs. Xinhua Winshare Publishing | American Public vs. EEDUCATION ALBERT AB |
| Nike vs. UNITED RENTALS | Nike vs. Air Transport Services | Nike vs. Air Lease | Nike vs. Jacquet Metal Service |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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