Correlation Between Canlan Ice and NIKE
Can any of the company-specific risk be diversified away by investing in both Canlan Ice 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 Canlan Ice and NIKE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canlan Ice Sports and NIKE Inc CDR, you can compare the effects of market volatilities on Canlan Ice 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 Canlan Ice with a short position of NIKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canlan Ice and NIKE.
Diversification Opportunities for Canlan Ice and NIKE
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canlan and NIKE is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports 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 Canlan Ice 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 Canlan Ice Sports 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 Canlan Ice i.e., Canlan Ice and NIKE go up and down completely randomly.
Pair Corralation between Canlan Ice and NIKE
Assuming the 90 days trading horizon Canlan Ice is expected to generate 1.53 times less return on investment than NIKE. But when comparing it to its historical volatility, Canlan Ice Sports is 3.04 times less risky than NIKE. It trades about 0.25 of its potential returns per unit of risk. NIKE Inc CDR is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,370 in NIKE Inc CDR on November 3, 2024 and sell it today you would earn a total of 53.00 from holding NIKE Inc CDR or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canlan Ice Sports vs. NIKE Inc CDR
Performance |
| Timeline |
| Canlan Ice Sports |
| NIKE Inc CDR |
Canlan Ice and NIKE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canlan Ice and NIKE
The main advantage of trading using opposite Canlan Ice and NIKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canlan Ice 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.| Canlan Ice vs. BMTC Group | Canlan Ice vs. Caldwell Partners International | Canlan Ice vs. TWC Enterprises | Canlan Ice vs. Madison Pacific Properties |
| NIKE vs. Globex Mining Enterprises | NIKE vs. Leading Edge Materials | NIKE vs. Cogeco Communications | NIKE vs. Doman Building Materials |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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