Correlation Between Nike and Virtus Investment

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

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

Diversification Opportunities for Nike and Virtus Investment

0.35

Correlation Coefficient

Nike  Virtus Investment

Weak diversification

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

Pair Corralation between Nike and Virtus Investment

Assuming the 90 days trading horizon Nike Inc is expected to generate 0.92 times more return on investment than Virtus Investment. However, Nike Inc is 1.09 times less risky than Virtus Investment. It trades about -0.15 of its potential returns per unit of risk. Virtus Investment Partners is currently generating about -0.18 per unit of risk. If you would invest  7,226  in Nike Inc on December 29, 2024 and sell it today you would lose (1,346) from holding Nike Inc or give up 18.63% of portfolio value over 90 days.

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

Nike Inc  vs.  Virtus Investment Partners

Nike Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Virtus Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus Investment Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Nike and Virtus Investment

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

The idea behind Nike Inc and Virtus Investment Partners 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.