Correlation Between VersaBank and NIKE

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

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

Diversification Opportunities for VersaBank and NIKE

0.19

Correlation Coefficient

VersaBank  NIKE

Average diversification

The 3 months correlation between VersaBank and NIKE is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank 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 VersaBank 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 VersaBank 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 VersaBank i.e., VersaBank and NIKE go up and down completely randomly.

Pair Corralation between VersaBank and NIKE

Assuming the 90 days trading horizon VersaBank is expected to under-perform the NIKE. In addition to that, VersaBank is 1.17 times more volatile than NIKE Inc CDR. It trades about -0.2 of its total potential returns per unit of risk. NIKE Inc CDR is currently generating about -0.12 per unit of volatility. If you would invest  1,382  in NIKE Inc CDR on December 28, 2024 and sell it today you would lose (212.00) from holding NIKE Inc CDR or give up 15.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

VersaBank  vs.  NIKE Inc CDR

VersaBank

Risk-Adjusted Performance

Very Weak

Over the last 90 days VersaBank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating 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 unfluctuating 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.

Pair Trading with VersaBank and NIKE

The main advantage of trading using opposite VersaBank and NIKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank 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 VersaBank 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.