Correlation Between Nike and ETF Securities

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Can any of the company-specific risk be diversified away by investing in both Nike and ETF Securities 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 ETF Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and ETF Securities, you can compare the effects of market volatilities on Nike and ETF Securities 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 ETF Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and ETF Securities.

Diversification Opportunities for Nike and ETF Securities

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Nike and ETF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and ETF Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Securities 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 ETF Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Securities has no effect on the direction of Nike i.e., Nike and ETF Securities go up and down completely randomly.

Pair Corralation between Nike and ETF Securities

If you would invest  0.00  in ETF Securities on December 29, 2023 and sell it today you would earn a total of  0.00  from holding ETF Securities or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy4.35%
ValuesDaily Returns

Nike Inc  vs.  ETF Securities

 Performance 
       Timeline  
Nike Inc 

Risk-Adjusted Performance

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Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward-looking signals remain rather sound which may send shares a bit higher in April 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
ETF Securities 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days ETF Securities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, ETF Securities is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Nike and ETF Securities Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nike and ETF Securities

The main advantage of trading using opposite Nike and ETF Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, ETF Securities 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 ETF Securities will offset losses from the drop in ETF Securities' long position.
The idea behind Nike Inc and ETF Securities 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.
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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