Correlation Between Nike and Deckers Outdoor
Can any of the company-specific risk be diversified away by investing in both Nike and Deckers Outdoor 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 Deckers Outdoor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and Deckers Outdoor, you can compare the effects of market volatilities on Nike and Deckers Outdoor 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 Deckers Outdoor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and Deckers Outdoor.
Diversification Opportunities for Nike and Deckers Outdoor
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nike and Deckers is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Deckers Outdoor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deckers Outdoor 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 Deckers Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deckers Outdoor has no effect on the direction of Nike i.e., Nike and Deckers Outdoor go up and down completely randomly.
Pair Corralation between Nike and Deckers Outdoor
Assuming the 90 days trading horizon Nike Inc is expected to under-perform the Deckers Outdoor. But the stock apears to be less risky and, when comparing its historical volatility, Nike Inc is 1.48 times less risky than Deckers Outdoor. The stock trades about -0.03 of its potential returns per unit of risk. The Deckers Outdoor is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 6,080 in Deckers Outdoor on September 19, 2024 and sell it today you would earn a total of 14,130 from holding Deckers Outdoor or generate 232.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Nike Inc vs. Deckers Outdoor
Performance |
| Timeline |
| Nike Inc |
| Deckers Outdoor |
Nike and Deckers Outdoor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and Deckers Outdoor
The main advantage of trading using opposite Nike and Deckers Outdoor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, Deckers Outdoor 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 Deckers Outdoor will offset losses from the drop in Deckers Outdoor's long position.| Nike vs. GALENA MINING LTD | Nike vs. INVITATION HOMES DL | Nike vs. Haier Smart Home | Nike vs. Tri Pointe Homes |
| Deckers Outdoor vs. Superior Plus Corp | Deckers Outdoor vs. NMI Holdings | Deckers Outdoor vs. SIVERS SEMICONDUCTORS AB | Deckers Outdoor vs. NorAm Drilling AS |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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