Correlation Between NIKE and Extendicare
Can any of the company-specific risk be diversified away by investing in both NIKE and Extendicare 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 Extendicare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIKE Inc CDR and Extendicare, you can compare the effects of market volatilities on NIKE and Extendicare 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 Extendicare. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIKE and Extendicare.
Diversification Opportunities for NIKE and Extendicare
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NIKE and Extendicare is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding NIKE Inc CDR and Extendicare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extendicare 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 CDR are associated (or correlated) with Extendicare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extendicare has no effect on the direction of NIKE i.e., NIKE and Extendicare go up and down completely randomly.
Pair Corralation between NIKE and Extendicare
Assuming the 90 days trading horizon NIKE Inc CDR is expected to under-perform the Extendicare. In addition to that, NIKE is 1.1 times more volatile than Extendicare. It trades about -0.21 of its total potential returns per unit of risk. Extendicare is currently generating about -0.04 per unit of volatility. If you would invest 1,024 in Extendicare on October 24, 2024 and sell it today you would lose (10.00) from holding Extendicare or give up 0.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NIKE Inc CDR vs. Extendicare
Performance |
| Timeline |
| NIKE Inc CDR |
| Extendicare |
NIKE and Extendicare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIKE and Extendicare
The main advantage of trading using opposite NIKE and Extendicare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIKE position performs unexpectedly, Extendicare 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 Extendicare will offset losses from the drop in Extendicare's long position.| NIKE vs. Canlan Ice Sports | NIKE vs. Orbit Garant Drilling | NIKE vs. Air Canada | NIKE vs. Diamond Estates Wines |
| Extendicare vs. Sienna Senior Living | Extendicare vs. Chartwell Retirement Residences | Extendicare vs. Chemtrade Logistics Income | Extendicare vs. NorthWest Healthcare 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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