Correlation Between Nike and Brown Forman

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Nike and Brown Forman 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 Brown Forman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and Brown Forman, you can compare the effects of market volatilities on Nike and Brown Forman 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 Brown Forman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and Brown Forman.

Diversification Opportunities for Nike and Brown Forman

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Nike and Brown is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Brown Forman Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Forman 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 Brown Forman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Forman has no effect on the direction of Nike i.e., Nike and Brown Forman go up and down completely randomly.

Pair Corralation between Nike and Brown Forman

Considering the 90-day investment horizon Nike Inc is expected to under-perform the Brown Forman. In addition to that, Nike is 1.43 times more volatile than Brown Forman. It trades about -0.02 of its total potential returns per unit of risk. Brown Forman is currently generating about -0.01 per unit of volatility. If you would invest  7,600  in Brown Forman on June 30, 2022 and sell it today you would lose (790.00)  from holding Brown Forman or give up 10.39% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Nike Inc  vs.  Brown Forman Inc

 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 rather sound forward-looking signals, Nike is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Nike Price Channel

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

Brown Price Channel

Nike and Brown Forman Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nike and Brown Forman

The main advantage of trading using opposite Nike and Brown Forman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, Brown Forman 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 Brown Forman will offset losses from the drop in Brown Forman's long position.
Nike vs. Amazon Inc
The idea behind Nike Inc and Brown Forman 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.
Brown Forman vs. Pernod Ricard Ord
Brown Forman vs. Amazon Inc
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

Other Complementary Tools

Content Syndication
Quickly integrate customizable finance content to your own investment portal
Go
Global Correlations
Find global opportunities by holding instruments from different markets
Go
Equity Valuation
Check real value of public entities based on technical and fundamental data
Go
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Go
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Go
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Go