Correlation Between Nike and Repligen
Can any of the company-specific risk be diversified away by investing in both Nike and Repligen 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 Repligen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and Repligen, you can compare the effects of market volatilities on Nike and Repligen 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 Repligen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and Repligen.
Diversification Opportunities for Nike and Repligen
Modest diversification
The 3 months correlation between Nike and Repligen is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Repligen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repligen 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 Repligen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repligen has no effect on the direction of Nike i.e., Nike and Repligen go up and down completely randomly.
Pair Corralation between Nike and Repligen
Considering the 90-day investment horizon Nike is expected to generate 4.13 times less return on investment than Repligen. But when comparing it to its historical volatility, Nike Inc is 2.63 times less risky than Repligen. It trades about 0.07 of its potential returns per unit of risk. Repligen is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 13,953 in Repligen on September 3, 2024 and sell it today you would earn a total of 1,101 from holding Repligen or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nike Inc vs. Repligen
Performance |
| Timeline |
| Nike Inc |
| Repligen |
Nike and Repligen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and Repligen
The main advantage of trading using opposite Nike and Repligen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, Repligen 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 Repligen will offset losses from the drop in Repligen's long position.The idea behind Nike Inc and Repligen 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.| Repligen vs. Intuitive Surgical | Repligen vs. ResMed Inc | Repligen vs. Merit Medical Systems | Repligen vs. ICU Medical |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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