Correlation Between Nike and Forward Industries
Can any of the company-specific risk be diversified away by investing in both Nike and Forward Industries 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 Forward Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and Forward Industries, you can compare the effects of market volatilities on Nike and Forward Industries 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 Forward Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and Forward Industries.
Diversification Opportunities for Nike and Forward Industries
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nike and Forward is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Forward Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forward Industries 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 Forward Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forward Industries has no effect on the direction of Nike i.e., Nike and Forward Industries go up and down completely randomly.
Pair Corralation between Nike and Forward Industries
Considering the 90-day investment horizon Nike Inc is expected to generate 0.65 times more return on investment than Forward Industries. However, Nike Inc is 1.55 times less risky than Forward Industries. It trades about 0.04 of its potential returns per unit of risk. Forward Industries is currently generating about -0.26 per unit of risk. If you would invest 7,558 in Nike Inc on November 27, 2024 and sell it today you would earn a total of 92.00 from holding Nike Inc or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nike Inc vs. Forward Industries
Performance |
| Timeline |
| Nike Inc |
| Forward Industries |
Nike and Forward Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and Forward Industries
The main advantage of trading using opposite Nike and Forward Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, Forward Industries 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 Forward Industries will offset losses from the drop in Forward Industries' long position.The idea behind Nike Inc and Forward Industries 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.| Forward Industries vs. Crocs Inc | Forward Industries vs. On Holding | Forward Industries vs. Deckers Outdoor | Forward Industries vs. Adidas AG ADR |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |