Correlation Between DRI Healthcare and NIKE

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

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

Diversification Opportunities for DRI Healthcare and NIKE

0.14

Correlation Coefficient

DRI Healthcare  NIKE

Average diversification

The 3 months correlation between DRI and NIKE is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding DRI Healthcare Trust and NIKE Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIKE Inc CDR and DRI Healthcare 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 DRI Healthcare Trust 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 CDR has no effect on the direction of DRI Healthcare i.e., DRI Healthcare and NIKE go up and down completely randomly.

Pair Corralation between DRI Healthcare and NIKE

Assuming the 90 days trading horizon DRI Healthcare Trust is expected to generate 1.32 times more return on investment than NIKE. However, DRI Healthcare is 1.32 times more volatile than NIKE Inc CDR. It trades about 0.0 of its potential returns per unit of risk. NIKE Inc CDR is currently generating about -0.05 per unit of risk. If you would invest  820.00  in DRI Healthcare Trust on December 21, 2024 and sell it today you would lose (18.00) from holding DRI Healthcare Trust or give up 2.2% of portfolio value over 90 days.

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

DRI Healthcare Trust  vs.  NIKE Inc CDR

DRI Healthcare Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days DRI Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, DRI Healthcare is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

NIKE Inc CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days NIKE Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, NIKE is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with DRI Healthcare and NIKE

The main advantage of trading using opposite DRI Healthcare and NIKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DRI Healthcare 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 DRI Healthcare Trust and NIKE Inc CDR 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.