Correlation Between Asics Corp and Nike
Can any of the company-specific risk be diversified away by investing in both Asics Corp 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 Asics Corp and Nike into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asics Corp ADR and Nike Inc, you can compare the effects of market volatilities on Asics Corp 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 Asics Corp with a short position of Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asics Corp and Nike.
Diversification Opportunities for Asics Corp and Nike
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asics and Nike is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Asics Corp ADR and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc and Asics Corp 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 Asics Corp ADR 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 Asics Corp i.e., Asics Corp and Nike go up and down completely randomly.
Pair Corralation between Asics Corp and Nike
Assuming the 90 days horizon Asics Corp ADR is expected to generate 1.44 times more return on investment than Nike. However, Asics Corp is 1.44 times more volatile than Nike Inc. It trades about 0.11 of its potential returns per unit of risk. Nike Inc is currently generating about -0.05 per unit of risk. If you would invest 877.00 in Asics Corp ADR on August 24, 2024 and sell it today you would earn a total of 946.00 from holding Asics Corp ADR or generate 107.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asics Corp ADR vs. Nike Inc
Performance |
| Timeline |
| Asics Corp ADR |
| Nike Inc |
Asics Corp and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asics Corp and Nike
The main advantage of trading using opposite Asics Corp and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asics Corp 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.| Asics Corp vs. American Rebel Holdings | Asics Corp vs. Adidas AG | Asics Corp vs. American Rebel Holdings | Asics Corp vs. Adidas AG ADR |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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