Correlation Between PUMA SE and Nike

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

By analyzing existing cross correlation between PUMA SE UNSPADR and Nike Inc, you can compare the effects of market volatilities on PUMA SE and Nike 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 PUMA SE with a short position of Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of PUMA SE and Nike.

Diversification Opportunities for PUMA SE and Nike

-0.45

Correlation Coefficient

PUMA SE  Nike

Very good diversification

The 3 months correlation between PUMA and Nike is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding PUMA SE UNSPADR and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc and PUMA SE 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 PUMA SE UNSPADR are associated (or correlated) with Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of PUMA SE i.e., PUMA SE and Nike go up and down completely randomly.

Pair Corralation between PUMA SE and Nike

Assuming the 90 days trading horizon PUMA SE UNSPADR is expected to generate 1.44 times more return on investment than Nike. However, PUMA SE is 1.44 times more volatile than Nike Inc. It trades about 0.04 of its potential returns per unit of risk. Nike Inc is currently generating about -0.03 per unit of risk. If you would invest  398.00  in PUMA SE UNSPADR on September 18, 2024 and sell it today you would earn a total of  48.00  from holding PUMA SE UNSPADR or generate 12.06% return on investment over 90 days.

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

PUMA SE UNSPADR  vs.  Nike Inc

PUMA SE UNSPADR

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PUMA SE UNSPADR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, PUMA SE reported solid returns over the last few months and may actually be approaching a breakup point.

Nike Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nike Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Nike is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PUMA SE and Nike

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

The idea behind PUMA SE UNSPADR and Nike Inc 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.