Correlation Between Nike and ONCOR

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

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

Diversification Opportunities for Nike and ONCOR

-0.24

Correlation Coefficient

Nike  ONCOR

Very good diversification

The 3 months correlation between Nike and ONCOR is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and ONCOR ELEC DELIVERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONCOR ELEC DELIVERY 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 ONCOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ONCOR ELEC DELIVERY has no effect on the direction of Nike i.e., Nike and ONCOR go up and down completely randomly.

Pair Corralation between Nike and ONCOR

Considering the 90-day investment horizon Nike Inc is expected to generate 2.43 times more return on investment than ONCOR. However, Nike is 2.43 times more volatile than ONCOR ELEC DELIVERY. It trades about -0.01 of its potential returns per unit of risk. ONCOR ELEC DELIVERY is currently generating about -0.04 per unit of risk. If you would invest  7,939  in Nike Inc on September 15, 2024 and sell it today you would lose (143.00) from holding Nike Inc or give up 1.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	62.5%
Values	Daily Returns

Nike Inc  vs.  ONCOR ELEC DELIVERY

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 rather sound forward-looking signals, Nike is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ONCOR ELEC DELIVERY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ONCOR ELEC DELIVERY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ONCOR is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nike and ONCOR

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

The idea behind Nike Inc and ONCOR ELEC DELIVERY 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.