Correlation Between Nike and ARPA Chain

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

Diversification Opportunities for Nike and ARPA Chain

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Nike and ARPA Chain is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and ARPA Chain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARPA Chain 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 ARPA Chain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARPA Chain has no effect on the direction of Nike i.e., Nike and ARPA Chain go up and down completely randomly.

Pair Corralation between Nike and ARPA Chain

Considering the 90-day investment horizon Nike Inc is expected to under-perform the ARPA Chain. But the stock apears to be less risky and, when comparing its historical volatility, Nike Inc is 1.09 times less risky than ARPA Chain. The stock trades about -0.29 of its potential returns per unit of risk. The ARPA Chain is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  3.55  in ARPA Chain on July 4, 2022 and sell it today you would lose (0.17)  from holding ARPA Chain or give up 4.79% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Nike Inc  vs.  ARPA Chain

 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 conflicting performance in the last few months, the Stock's forward-looking signals remain rather sound which may send shares a bit higher in November 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Nike Price Channel

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

ARPA Chain Price Channel

Nike and ARPA Chain Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nike and ARPA Chain

The main advantage of trading using opposite Nike and ARPA Chain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, ARPA Chain 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 ARPA Chain will offset losses from the drop in ARPA Chain's long position.
Nike vs. Amazon Inc
The idea behind Nike Inc and ARPA Chain 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 CEO Directory module to screen CEOs from public companies around the world.

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