Correlation Between Nike and Asics Corp

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

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

Diversification Opportunities for Nike and Asics Corp

0.36

Correlation Coefficient

Nike  Asics Corp

Weak diversification

The 3 months correlation between Nike and Asics is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Asics Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asics Corp ADR 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 Asics Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asics Corp ADR has no effect on the direction of Nike i.e., Nike and Asics Corp go up and down completely randomly.

Pair Corralation between Nike and Asics Corp

Considering the 90-day investment horizon Nike Inc is expected to under-perform the Asics Corp. But the stock apears to be less risky and, when comparing its historical volatility, Nike Inc is 1.25 times less risky than Asics Corp. The stock trades about -0.09 of its potential returns per unit of risk. The Asics Corp ADR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,961  in Asics Corp ADR on December 28, 2024 and sell it today you would earn a total of  187.00  from holding Asics Corp ADR or generate 9.54% return on investment over 90 days.

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

Nike Inc  vs.  Asics Corp ADR

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 latest conflicting performance, the Stock's forward-looking signals remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Asics Corp ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asics Corp ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Asics Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nike and Asics Corp

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

The idea behind Nike Inc and Asics Corp ADR 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.