Correlation Between Nike and 1inch

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Can any of the company-specific risk be diversified away by investing in both Nike and 1inch 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 1inch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and 1inch, you can compare the effects of market volatilities on Nike and 1inch 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 1inch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and 1inch.

Diversification Opportunities for Nike and 1inch

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Nike and 1inch is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and 1inch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1inch 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 1inch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1inch has no effect on the direction of Nike i.e., Nike and 1inch go up and down completely randomly.

Pair Corralation between Nike and 1inch

Considering the 90-day investment horizon Nike Inc is expected to generate 0.48 times more return on investment than 1inch. However, Nike Inc is 2.08 times less risky than 1inch. It trades about -0.21 of its potential returns per unit of risk. 1inch is currently generating about -0.12 per unit of risk. If you would invest  10,645  in Nike Inc on July 2, 2022 and sell it today you would lose (1,112)  from holding Nike Inc or give up 10.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Nike Inc  vs.  1inch

 Performance (%) 
       Timeline  
Nike Inc 
Nike Performance
0 of 100
Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's forward-looking signals remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Nike Price Channel

1inch 
1inch Performance
0 of 100
Over the last 90 days 1inch has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, 1inch is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

1inch Price Channel

Nike and 1inch Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nike and 1inch

The main advantage of trading using opposite Nike and 1inch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, 1inch 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 1inch will offset losses from the drop in 1inch's long position.
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The idea behind Nike Inc and 1inch 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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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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