Correlation Between Nike and Powered Brands
Can any of the company-specific risk be diversified away by investing in both Nike and Powered Brands 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 Powered Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and Powered Brands, you can compare the effects of market volatilities on Nike and Powered Brands 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 Powered Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and Powered Brands.
Diversification Opportunities for Nike and Powered Brands
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nike and Powered is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Powered Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powered Brands 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 Powered Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powered Brands has no effect on the direction of Nike i.e., Nike and Powered Brands go up and down completely randomly.
Pair Corralation between Nike and Powered Brands
If you would invest (100.00) in Powered Brands on October 25, 2024 and sell it today you would earn a total of 100.00 from holding Powered Brands or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 0.0% |
| Values | Daily Returns |
Nike Inc vs. Powered Brands
Performance |
| Timeline |
| Nike Inc |
| Powered Brands |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nike and Powered Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and Powered Brands
The main advantage of trading using opposite Nike and Powered Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, Powered Brands 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 Powered Brands will offset losses from the drop in Powered Brands' long position.The idea behind Nike Inc and Powered Brands 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.| Powered Brands vs. Nike Inc | Powered Brands vs. Norfolk Southern | Powered Brands vs. Newell Brands | Powered Brands vs. Lindblad Expeditions Holdings |
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.
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