Correlation Between NYSE Composite and Nike
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Nike 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 NYSE Composite and Nike into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Nike Inc, you can compare the effects of market volatilities on NYSE Composite and Nike 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 NYSE Composite with a short position of Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Nike.
Diversification Opportunities for NYSE Composite and Nike
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NYSE and Nike is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc and NYSE Composite 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 NYSE Composite are associated (or correlated) with Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of NYSE Composite i.e., NYSE Composite and Nike go up and down completely randomly.
Pair Corralation between NYSE Composite and Nike
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.32 times less return on investment than Nike. But when comparing it to its historical volatility, NYSE Composite is 3.62 times less risky than Nike. It trades about 0.21 of its potential returns per unit of risk. Nike Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 7,084 in Nike Inc on November 18, 2024 and sell it today you would earn a total of 220.00 from holding Nike Inc or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Nike Inc
Performance |
| Timeline |
NYSE Composite and Nike Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Nike Inc
Pair trading matchups for Nike
Pair Trading with NYSE Composite and Nike
The main advantage of trading using opposite NYSE Composite and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike's long position.| NYSE Composite vs. Zhihu Inc ADR | NYSE Composite vs. Allied Gaming Entertainment | NYSE Composite vs. Asure Software | NYSE Composite vs. SohuCom |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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