Correlation Between Wilmington Capital and NIKE

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

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

Diversification Opportunities for Wilmington Capital and NIKE

-0.29

Correlation Coefficient

Wilmington Capital  NIKE

Very good diversification

The 3 months correlation between Wilmington and NIKE is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Capital Management 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 Wilmington Capital 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 Wilmington Capital Management 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 Wilmington Capital i.e., Wilmington Capital and NIKE go up and down completely randomly.

Pair Corralation between Wilmington Capital and NIKE

Assuming the 90 days trading horizon Wilmington Capital Management is expected to generate 2.0 times more return on investment than NIKE. However, Wilmington Capital is 2.0 times more volatile than NIKE Inc CDR. It trades about 0.02 of its potential returns per unit of risk. NIKE Inc CDR is currently generating about -0.05 per unit of risk. If you would invest  221.00  in Wilmington Capital Management on October 9, 2024 and sell it today you would earn a total of  10.00  from holding Wilmington Capital Management or generate 4.52% return on investment over 90 days.

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

Wilmington Capital Management  vs.  NIKE Inc CDR

Wilmington Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilmington Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

NIKE Inc CDR

Risk-Adjusted Performance

0 of 100

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 February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Wilmington Capital and NIKE

The main advantage of trading using opposite Wilmington Capital and NIKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmington Capital 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 Wilmington Capital Management 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.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.