Correlation Between Nike and Malibu Boats
Can any of the company-specific risk be diversified away by investing in both Nike and Malibu Boats 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 Malibu Boats into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and Malibu Boats, you can compare the effects of market volatilities on Nike and Malibu Boats 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 Malibu Boats. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and Malibu Boats.
Diversification Opportunities for Nike and Malibu Boats
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nike and Malibu is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Malibu Boats in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malibu Boats 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 Malibu Boats. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malibu Boats has no effect on the direction of Nike i.e., Nike and Malibu Boats go up and down completely randomly.
Pair Corralation between Nike and Malibu Boats
Considering the 90-day investment horizon Nike Inc is expected to generate 0.55 times more return on investment than Malibu Boats. However, Nike Inc is 1.82 times less risky than Malibu Boats. It trades about 0.15 of its potential returns per unit of risk. Malibu Boats is currently generating about -0.01 per unit of risk. If you would invest 7,451 in Nike Inc on September 18, 2024 and sell it today you would earn a total of 349.00 from holding Nike Inc or generate 4.68% 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. Malibu Boats
Performance |
| Timeline |
| Nike Inc |
| Malibu Boats |
Nike and Malibu Boats Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and Malibu Boats
The main advantage of trading using opposite Nike and Malibu Boats positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, Malibu Boats 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 Malibu Boats will offset losses from the drop in Malibu Boats' long position.The idea behind Nike Inc and Malibu Boats 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.| Malibu Boats vs. Polaris Industries | Malibu Boats vs. MCBC Holdings | Malibu Boats vs. LCI Industries | Malibu Boats vs. Thor Industries |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |