Correlation Between Nike and National Beverage
Can any of the company-specific risk be diversified away by investing in both Nike and National Beverage 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 Nike and National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and National Beverage Corp, you can compare the effects of market volatilities on Nike and National Beverage 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 Nike with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and National Beverage.
Diversification Opportunities for Nike and National Beverage
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nike and National is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp and Nike 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 Nike Inc are associated (or correlated) with National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Nike i.e., Nike and National Beverage go up and down completely randomly.
Pair Corralation between Nike and National Beverage
Assuming the 90 days horizon Nike Inc is expected to generate 0.91 times more return on investment than National Beverage. However, Nike Inc is 1.1 times less risky than National Beverage. It trades about 0.26 of its potential returns per unit of risk. National Beverage Corp is currently generating about -0.03 per unit of risk. If you would invest 6,862 in Nike Inc on September 21, 2024 and sell it today you would earn a total of 668.00 from holding Nike Inc or generate 9.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nike Inc vs. National Beverage Corp
Performance |
| Timeline |
| Nike Inc |
| National Beverage Corp |
Nike and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and National Beverage
The main advantage of trading using opposite Nike and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.| Nike vs. National Beverage Corp | Nike vs. TITANIUM TRANSPORTGROUP | Nike vs. Kaufman Broad SA | Nike vs. Texas Roadhouse |
| National Beverage vs. Align Technology | National Beverage vs. Microchip Technology Incorporated | National Beverage vs. X FAB Silicon Foundries | National Beverage vs. National Health Investors |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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