Correlation Between NIKE and Titanium Transportation

Can any of the company-specific risk be diversified away by investing in both NIKE and Titanium Transportation 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 Titanium Transportation 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 Titanium Transportation Group, you can compare the effects of market volatilities on NIKE and Titanium Transportation 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 Titanium Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIKE and Titanium Transportation.

Diversification Opportunities for NIKE and Titanium Transportation

-0.35

Correlation Coefficient

NIKE  Titanium Transportation

Very good diversification

The 3 months correlation between NIKE and Titanium is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding NIKE Inc CDR and Titanium Transportation Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titanium Transportation 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 Titanium Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titanium Transportation has no effect on the direction of NIKE i.e., NIKE and Titanium Transportation go up and down completely randomly.

Pair Corralation between NIKE and Titanium Transportation

Assuming the 90 days trading horizon NIKE Inc CDR is expected to under-perform the Titanium Transportation. In addition to that, NIKE is 1.28 times more volatile than Titanium Transportation Group. It trades about -0.32 of its total potential returns per unit of risk. Titanium Transportation Group is currently generating about -0.27 per unit of volatility. If you would invest  242.00  in Titanium Transportation Group on October 9, 2024 and sell it today you would lose (12.00) from holding Titanium Transportation Group or give up 4.96% of portfolio value over 90 days.

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

NIKE Inc CDR  vs.  Titanium Transportation Group

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Titanium Transportation

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Titanium Transportation Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Titanium Transportation is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with NIKE and Titanium Transportation

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

The idea behind NIKE Inc CDR and Titanium Transportation Group 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.