Correlation Between Nike and Orchestra BioMed
Can any of the company-specific risk be diversified away by investing in both Nike and Orchestra BioMed 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 Orchestra BioMed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and Orchestra BioMed Holdings, you can compare the effects of market volatilities on Nike and Orchestra BioMed 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 Orchestra BioMed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and Orchestra BioMed.
Diversification Opportunities for Nike and Orchestra BioMed
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nike and Orchestra is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Orchestra BioMed Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orchestra BioMed 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 Orchestra BioMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orchestra BioMed Holdings has no effect on the direction of Nike i.e., Nike and Orchestra BioMed go up and down completely randomly.
Pair Corralation between Nike and Orchestra BioMed
Considering the 90-day investment horizon Nike Inc is expected to under-perform the Orchestra BioMed. But the stock apears to be less risky and, when comparing its historical volatility, Nike Inc is 2.58 times less risky than Orchestra BioMed. The stock trades about -0.03 of its potential returns per unit of risk. The Orchestra BioMed Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 524.00 in Orchestra BioMed Holdings on September 3, 2024 and sell it today you would earn a total of 39.00 from holding Orchestra BioMed Holdings or generate 7.44% 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. Orchestra BioMed Holdings
Performance |
| Timeline |
| Nike Inc |
| Orchestra BioMed Holdings |
Nike and Orchestra BioMed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and Orchestra BioMed
The main advantage of trading using opposite Nike and Orchestra BioMed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, Orchestra BioMed 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 Orchestra BioMed will offset losses from the drop in Orchestra BioMed's long position.The idea behind Nike Inc and Orchestra BioMed 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.| Orchestra BioMed vs. Tandy Leather Factory | Orchestra BioMed vs. Westinghouse Air Brake | Orchestra BioMed vs. Citi Trends | Orchestra BioMed vs. Nike Inc |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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