Correlation Between Nike and Tarsus Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Nike and Tarsus Pharmaceuticals 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 Tarsus Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and Tarsus Pharmaceuticals, you can compare the effects of market volatilities on Nike and Tarsus Pharmaceuticals 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 Tarsus Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and Tarsus Pharmaceuticals.
Diversification Opportunities for Nike and Tarsus Pharmaceuticals
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nike and Tarsus is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Tarsus Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tarsus Pharmaceuticals 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 Tarsus Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tarsus Pharmaceuticals has no effect on the direction of Nike i.e., Nike and Tarsus Pharmaceuticals go up and down completely randomly.
Pair Corralation between Nike and Tarsus Pharmaceuticals
Considering the 90-day investment horizon Nike Inc is expected to under-perform the Tarsus Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Nike Inc is 1.74 times less risky than Tarsus Pharmaceuticals. The stock trades about -0.06 of its potential returns per unit of risk. The Tarsus Pharmaceuticals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,729 in Tarsus Pharmaceuticals on September 3, 2024 and sell it today you would earn a total of 3,313 from holding Tarsus Pharmaceuticals or generate 191.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nike Inc vs. Tarsus Pharmaceuticals
Performance |
| Timeline |
| Nike Inc |
| Tarsus Pharmaceuticals |
Nike and Tarsus Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and Tarsus Pharmaceuticals
The main advantage of trading using opposite Nike and Tarsus Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, Tarsus Pharmaceuticals 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 Tarsus Pharmaceuticals will offset losses from the drop in Tarsus Pharmaceuticals' long position.The idea behind Nike Inc and Tarsus Pharmaceuticals 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.| Tarsus Pharmaceuticals vs. DiaMedica Therapeutics | Tarsus Pharmaceuticals vs. Lyra Therapeutics | Tarsus Pharmaceuticals vs. Centessa Pharmaceuticals PLC |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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