Correlation Between Nike and MCBC Holdings
Can any of the company-specific risk be diversified away by investing in both Nike and MCBC Holdings 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 MCBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and MCBC Holdings, you can compare the effects of market volatilities on Nike and MCBC Holdings 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 MCBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and MCBC Holdings.
Diversification Opportunities for Nike and MCBC Holdings
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nike and MCBC is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and MCBC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCBC Holdings 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 MCBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCBC Holdings has no effect on the direction of Nike i.e., Nike and MCBC Holdings go up and down completely randomly.
Pair Corralation between Nike and MCBC Holdings
Considering the 90-day investment horizon Nike Inc is expected to generate 0.88 times more return on investment than MCBC Holdings. However, Nike Inc is 1.14 times less risky than MCBC Holdings. It trades about 0.15 of its potential returns per unit of risk. MCBC Holdings is currently generating about -0.11 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. MCBC Holdings
Performance |
| Timeline |
| Nike Inc |
| MCBC Holdings |
Nike and MCBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and MCBC Holdings
The main advantage of trading using opposite Nike and MCBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, MCBC Holdings 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 MCBC Holdings will offset losses from the drop in MCBC Holdings' long position.The idea behind Nike Inc and MCBC Holdings 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.| MCBC Holdings vs. Malibu Boats | MCBC Holdings vs. Onewater Marine | MCBC Holdings vs. Heidrick Struggles International | MCBC Holdings vs. Johnson Outdoors |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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