Correlation Between Nike and Vince Holding
Can any of the company-specific risk be diversified away by investing in both Nike and Vince Holding 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 Vince Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and Vince Holding Corp, you can compare the effects of market volatilities on Nike and Vince Holding 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 Vince Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and Vince Holding.
Diversification Opportunities for Nike and Vince Holding
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nike and Vince is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Vince Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vince Holding Corp 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 Vince Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vince Holding Corp has no effect on the direction of Nike i.e., Nike and Vince Holding go up and down completely randomly.
Pair Corralation between Nike and Vince Holding
Considering the 90-day investment horizon Nike Inc is expected to under-perform the Vince Holding. But the stock apears to be less risky and, when comparing its historical volatility, Nike Inc is 3.31 times less risky than Vince Holding. The stock trades about -0.05 of its potential returns per unit of risk. The Vince Holding Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 125.00 in Vince Holding Corp on August 26, 2024 and sell it today you would earn a total of 45.00 from holding Vince Holding Corp or generate 36.0% 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. Vince Holding Corp
Performance |
| Timeline |
| Nike Inc |
| Vince Holding Corp |
Nike and Vince Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and Vince Holding
The main advantage of trading using opposite Nike and Vince Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, Vince Holding 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 Vince Holding will offset losses from the drop in Vince Holding's long position.The idea behind Nike Inc and Vince Holding Corp 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.| Vince Holding vs. VF Corporation | Vince Holding vs. Levi Strauss Co | Vince Holding vs. Under Armour A | Vince Holding vs. Oxford Industries |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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