Correlation Between Nike and Malibu Boats

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

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

Diversification Opportunities for Nike and Malibu Boats

0.11

Correlation Coefficient

Nike  Malibu Boats

Average diversification

The 3 months correlation between Nike and Malibu is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Malibu Boats in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malibu Boats 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 Malibu Boats. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malibu Boats has no effect on the direction of Nike i.e., Nike and Malibu Boats go up and down completely randomly.

Pair Corralation between Nike and Malibu Boats

Considering the 90-day investment horizon Nike Inc is expected to generate 0.81 times more return on investment than Malibu Boats. However, Nike Inc is 1.23 times less risky than Malibu Boats. It trades about -0.1 of its potential returns per unit of risk. Malibu Boats is currently generating about -0.1 per unit of risk. If you would invest  7,604  in Nike Inc on December 27, 2024 and sell it today you would lose (1,024) from holding Nike Inc or give up 13.47% of portfolio value over 90 days.

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

Nike Inc  vs.  Malibu Boats

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 conflicting performance in the last few months, the Stock's forward-looking signals remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Malibu Boats

Risk-Adjusted Performance

Very Weak

Over the last 90 days Malibu Boats has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic 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.

Pair Trading with Nike and Malibu Boats

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

The idea behind Nike Inc and Malibu Boats 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.