Correlation Between NIKE and BOEING CDR

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

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

Diversification Opportunities for NIKE and BOEING CDR

-0.28

Correlation Coefficient

NIKE  BOEING CDR

Very good diversification

The 3 months correlation between NIKE and BOEING is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding NIKE Inc CDR and BOEING CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOEING CDR 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 CDR are associated (or correlated) with BOEING CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOEING CDR has no effect on the direction of NIKE i.e., NIKE and BOEING CDR go up and down completely randomly.

Pair Corralation between NIKE and BOEING CDR

Assuming the 90 days trading horizon NIKE is expected to generate 15.55 times less return on investment than BOEING CDR. In addition to that, NIKE is 1.16 times more volatile than BOEING CDR. It trades about 0.01 of its total potential returns per unit of risk. BOEING CDR is currently generating about 0.12 per unit of volatility. If you would invest  2,715  in BOEING CDR on December 1, 2024 and sell it today you would earn a total of  296.00  from holding BOEING CDR or generate 10.9% return on investment over 90 days.

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

NIKE Inc CDR  vs.  BOEING CDR

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 latest stock price disarray, may contribute to short-term losses for the investors.

BOEING CDR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BOEING CDR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BOEING CDR may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with NIKE and BOEING CDR

The main advantage of trading using opposite NIKE and BOEING CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIKE position performs unexpectedly, BOEING CDR 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 BOEING CDR will offset losses from the drop in BOEING CDR's long position.

The idea behind NIKE Inc CDR and BOEING 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.