Correlation Between High Liner and NIKE
Can any of the company-specific risk be diversified away by investing in both High Liner 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 High Liner and NIKE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Liner Foods and NIKE Inc CDR, you can compare the effects of market volatilities on High Liner 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 High Liner with a short position of NIKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Liner and NIKE.
Diversification Opportunities for High Liner and NIKE
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between High and NIKE is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding High Liner Foods and NIKE Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIKE Inc CDR and High Liner 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 High Liner Foods 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 CDR has no effect on the direction of High Liner i.e., High Liner and NIKE go up and down completely randomly.
Pair Corralation between High Liner and NIKE
Assuming the 90 days trading horizon High Liner Foods is expected to generate 1.08 times more return on investment than NIKE. However, High Liner is 1.08 times more volatile than NIKE Inc CDR. It trades about 0.48 of its potential returns per unit of risk. NIKE Inc CDR is currently generating about 0.04 per unit of risk. If you would invest 1,292 in High Liner Foods on September 2, 2024 and sell it today you would earn a total of 249.00 from holding High Liner Foods or generate 19.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Liner Foods vs. NIKE Inc CDR
Performance |
| Timeline |
| High Liner Foods |
| NIKE Inc CDR |
High Liner and NIKE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Liner and NIKE
The main advantage of trading using opposite High Liner and NIKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Liner 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.| High Liner vs. Leons Furniture Limited | High Liner vs. Autocanada | High Liner vs. Maple Leaf Foods | High Liner vs. Premium Brands Holdings |
| NIKE vs. Advent Wireless | NIKE vs. Totally Hip Technologies | NIKE vs. Ocumetics Technology Corp | NIKE vs. Brookfield Office Properties |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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