Correlation Between Nike and Silver Bear

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

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

Diversification Opportunities for Nike and Silver Bear

0.0

Correlation Coefficient

Nike  Silver Bear

Pay attention - limited upside

The 3 months correlation between Nike and Silver is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Silver Bear Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Bear Resources 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 Silver Bear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Bear Resources has no effect on the direction of Nike i.e., Nike and Silver Bear go up and down completely randomly.

Pair Corralation between Nike and Silver Bear

If you would invest  0.03  in Silver Bear Resources on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Silver Bear Resources or generate 0.0% return on investment over 90 days.

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

Nike Inc  vs.  Silver Bear Resources

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.

Silver Bear Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Silver Bear Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Silver Bear is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nike and Silver Bear

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

The idea behind Nike Inc and Silver Bear Resources 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.

Check out your portfolio center.

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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.