Correlation Between Nike and Blackberry

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

Diversification Opportunities for Nike and Blackberry

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Nike and Blackberry is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Blackberry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackberry 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 Blackberry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackberry has no effect on the direction of Nike i.e., Nike and Blackberry go up and down completely randomly.

Pair Corralation between Nike and Blackberry

Considering the 90-day investment horizon Nike Inc is expected to under-perform the Blackberry. In addition to that, Nike is 1.33 times more volatile than Blackberry. It trades about -0.29 of its total potential returns per unit of risk. Blackberry is currently generating about -0.33 per unit of volatility. If you would invest  574.00  in Blackberry on July 4, 2022 and sell it today you would lose (104.00)  from holding Blackberry or give up 18.12% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Nike Inc  vs.  Blackberry

 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

Blackberry 
Blackberry Performance
0 of 100
Over the last 90 days Blackberry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Blackberry Price Channel

Nike and Blackberry Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nike and Blackberry

The main advantage of trading using opposite Nike and Blackberry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, Blackberry 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 Blackberry will offset losses from the drop in Blackberry's long position.
Nike vs. Amazon Inc
The idea behind Nike Inc and Blackberry 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 Stock Screener module to find equities using custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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