Correlation Between Micron Technology, and NIKE

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

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

Diversification Opportunities for Micron Technology, and NIKE

0.38

Correlation Coefficient

Micron Technology,  NIKE

Weak diversification

The 3 months correlation between Micron and NIKE is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology, 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 Micron Technology, 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 Micron Technology, 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 Micron Technology, i.e., Micron Technology, and NIKE go up and down completely randomly.

Pair Corralation between Micron Technology, and NIKE

Assuming the 90 days trading horizon Micron Technology, is expected to under-perform the NIKE. In addition to that, Micron Technology, is 4.07 times more volatile than NIKE Inc CDR. It trades about -0.12 of its total potential returns per unit of risk. NIKE Inc CDR is currently generating about -0.26 per unit of volatility. If you would invest  1,448  in NIKE Inc CDR on October 8, 2024 and sell it today you would lose (86.00) from holding NIKE Inc CDR or give up 5.94% of portfolio value over 90 days.

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

Micron Technology,  vs.  NIKE Inc CDR

Micron Technology,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Micron Technology, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

NIKE Inc CDR

Risk-Adjusted Performance

0 of 100

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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Micron Technology, and NIKE

The main advantage of trading using opposite Micron Technology, and NIKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology, 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 Micron Technology, 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.