Correlation Between Nike and Mativ Holdings

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

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

Diversification Opportunities for Nike and Mativ Holdings

0.68

Correlation Coefficient

Nike  Mativ Holdings

Poor diversification

The 3 months correlation between Nike and Mativ is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Mativ Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mativ Holdings 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 Mativ Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mativ Holdings has no effect on the direction of Nike i.e., Nike and Mativ Holdings go up and down completely randomly.

Pair Corralation between Nike and Mativ Holdings

Considering the 90-day investment horizon Nike Inc is expected to generate 0.68 times more return on investment than Mativ Holdings. However, Nike Inc is 1.46 times less risky than Mativ Holdings. It trades about -0.27 of its potential returns per unit of risk. Mativ Holdings is currently generating about -0.31 per unit of risk. If you would invest  7,858  in Nike Inc on October 6, 2024 and sell it today you would lose (527.00) from holding Nike Inc or give up 6.71% of portfolio value over 90 days.

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

Nike Inc  vs.  Mativ Holdings

Nike Inc

Risk-Adjusted Performance

0 of 100

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.

Mativ Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mativ Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Nike and Mativ Holdings

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

The idea behind Nike Inc and Mativ Holdings 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.