Correlation Between Titanium Transportation and NIKE

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

By analyzing existing cross correlation between Titanium Transportation Group and NIKE Inc CDR, you can compare the effects of market volatilities on Titanium Transportation 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 Titanium Transportation with a short position of NIKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titanium Transportation and NIKE.

Diversification Opportunities for Titanium Transportation and NIKE

-0.24

Correlation Coefficient

Titanium Transportation  NIKE

Very good diversification

The 3 months correlation between Titanium and NIKE is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Titanium Transportation Group and NIKE Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIKE Inc CDR and Titanium Transportation 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 Titanium Transportation Group 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 CDR has no effect on the direction of Titanium Transportation i.e., Titanium Transportation and NIKE go up and down completely randomly.

Pair Corralation between Titanium Transportation and NIKE

Assuming the 90 days trading horizon Titanium Transportation Group is expected to under-perform the NIKE. In addition to that, Titanium Transportation is 1.33 times more volatile than NIKE Inc CDR. It trades about -0.27 of its total potential returns per unit of risk. NIKE Inc CDR is currently generating about -0.09 per unit of volatility. If you would invest  1,420  in NIKE Inc CDR on December 22, 2024 and sell it today you would lose (161.00) from holding NIKE Inc CDR or give up 11.34% of portfolio value over 90 days.

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

Titanium Transportation Group  vs.  NIKE Inc CDR

Titanium Transportation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Titanium Transportation Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

NIKE Inc CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days NIKE Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Titanium Transportation and NIKE

The main advantage of trading using opposite Titanium Transportation and NIKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titanium Transportation 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 Titanium Transportation Group and NIKE Inc CDR 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.