Correlation Between Nike and Drive Shack
Can any of the company-specific risk be diversified away by investing in both Nike and Drive Shack 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 Drive Shack into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and Drive Shack, you can compare the effects of market volatilities on Nike and Drive Shack 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 Drive Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and Drive Shack.
Diversification Opportunities for Nike and Drive Shack
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nike and Drive is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Drive Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drive Shack 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 Drive Shack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Drive Shack has no effect on the direction of Nike i.e., Nike and Drive Shack go up and down completely randomly.
Pair Corralation between Nike and Drive Shack
If you would invest 40.00 in Drive Shack on September 4, 2024 and sell it today you would earn a total of 0.00 from holding Drive Shack or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 0.37% |
| Values | Daily Returns |
Nike Inc vs. Drive Shack
Performance |
| Timeline |
| Nike Inc |
| Drive Shack |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nike and Drive Shack Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and Drive Shack
The main advantage of trading using opposite Nike and Drive Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, Drive Shack 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 Drive Shack will offset losses from the drop in Drive Shack's long position.The idea behind Nike Inc and Drive Shack pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Drive Shack vs. Hawkins | Drive Shack vs. Eastern Co | Drive Shack vs. Avient Corp | Drive Shack vs. Postal Realty Trust |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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