Correlation Between Ross Stores and Nike
Can any of the company-specific risk be diversified away by investing in both Ross Stores 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 Ross Stores and Nike into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and Nike Inc, you can compare the effects of market volatilities on Ross Stores 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 Ross Stores with a short position of Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Nike.
Diversification Opportunities for Ross Stores and Nike
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ross and Nike is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc and Ross Stores 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 Ross Stores 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 Ross Stores i.e., Ross Stores and Nike go up and down completely randomly.
Pair Corralation between Ross Stores and Nike
Given the investment horizon of 90 days Ross Stores is expected to under-perform the Nike. But the stock apears to be less risky and, when comparing its historical volatility, Ross Stores is 1.68 times less risky than Nike. The stock trades about -0.36 of its potential returns per unit of risk. The Nike Inc is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 9,954 in Nike Inc on February 1, 2024 and sell it today you would lose (728.00) from holding Nike Inc or give up 7.31% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ross Stores vs. Nike Inc
Performance |
Timeline |
Ross Stores |
Nike Inc |
Ross Stores and Nike Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ross Stores and Nike
The main advantage of trading using opposite Ross Stores and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores 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.Ross Stores vs. Burlington Stores | Ross Stores vs. American Eagle Outfitters | Ross Stores vs. Lululemon Athletica | Ross Stores vs. Foot Locker |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data |