Correlation Between Joby Aviation and Nike

Can any of the company-specific risk be diversified away by investing in both Joby Aviation 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 Joby Aviation and Nike into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Joby Aviation and Nike Inc, you can compare the effects of market volatilities on Joby Aviation 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 Joby Aviation with a short position of Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Joby Aviation and Nike.

Diversification Opportunities for Joby Aviation and Nike

0.78

Correlation Coefficient

Joby Aviation  Nike

Poor diversification

The 3 months correlation between Joby and Nike is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Joby Aviation and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc and Joby Aviation 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 Joby Aviation 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 Joby Aviation i.e., Joby Aviation and Nike go up and down completely randomly.

Pair Corralation between Joby Aviation and Nike

Given the investment horizon of 90 days Joby Aviation is expected to under-perform the Nike. In addition to that, Joby Aviation is 2.08 times more volatile than Nike Inc. It trades about -0.02 of its total potential returns per unit of risk. Nike Inc is currently generating about -0.01 per unit of volatility. If you would invest  9,256  in Nike Inc on February 1, 2024 and sell it today you would lose (30.00) from holding Nike Inc or give up 0.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Joby Aviation  vs.  Nike Inc

Joby Aviation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joby Aviation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Nike Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward-looking signals remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Joby Aviation and Nike

The main advantage of trading using opposite Joby Aviation and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Joby Aviation 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.

The idea behind Joby Aviation and Nike Inc 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.