Correlation Between Iridium Communications and NIKE
Can any of the company-specific risk be diversified away by investing in both Iridium Communications 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 Iridium Communications and NIKE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and NIKE Inc, you can compare the effects of market volatilities on Iridium Communications 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 Iridium Communications with a short position of NIKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and NIKE.
Diversification Opportunities for Iridium Communications and NIKE
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Iridium and NIKE is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and NIKE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIKE Inc and Iridium Communications 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 Iridium Communications 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 Iridium Communications i.e., Iridium Communications and NIKE go up and down completely randomly.
Pair Corralation between Iridium Communications and NIKE
Assuming the 90 days horizon Iridium Communications is expected to under-perform the NIKE. In addition to that, Iridium Communications is 1.36 times more volatile than NIKE Inc. It trades about -0.03 of its total potential returns per unit of risk. NIKE Inc is currently generating about -0.03 per unit of volatility. If you would invest 10,987 in NIKE Inc on September 26, 2024 and sell it today you would lose (3,695) from holding NIKE Inc or give up 33.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iridium Communications vs. NIKE Inc
Performance |
| Timeline |
| Iridium Communications |
| NIKE Inc |
Iridium Communications and NIKE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and NIKE
The main advantage of trading using opposite Iridium Communications and NIKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications 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.| Iridium Communications vs. T Mobile | Iridium Communications vs. ATT Inc | Iridium Communications vs. ATT Inc | Iridium Communications vs. Deutsche Telekom AG |
| NIKE vs. T MOBILE US | NIKE vs. HEMISPHERE EGY | NIKE vs. Iridium Communications | NIKE vs. Entravision Communications |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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