Correlation Between Starbucks Corp and Nike

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

Diversification Opportunities for Starbucks Corp and Nike

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Starbucks and Nike is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks Corp and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc and Starbucks Corp 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 Starbucks Corp 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 has no effect on the direction of Starbucks Corp i.e., Starbucks Corp and Nike go up and down completely randomly.

Pair Corralation between Starbucks Corp and Nike

Given the investment horizon of 90 days Starbucks Corp is expected to generate 1.07 times more return on investment than Nike. However, Starbucks Corp is 1.07 times more volatile than Nike Inc. It trades about 0.1 of its potential returns per unit of risk. Nike Inc is currently generating about -0.17 per unit of risk. If you would invest  8,341  in Starbucks Corp on July 1, 2022 and sell it today you would earn a total of  370.00  from holding Starbucks Corp or generate 4.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Starbucks Corp  vs.  Nike Inc

 Performance (%) 
       Timeline  
Starbucks Corp 
Starbucks Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Starbucks Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Starbucks Corp may actually be approaching a critical reversion point that can send shares even higher in October 2022.

Starbucks Price Channel

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

Starbucks Corp and Nike Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Starbucks Corp and Nike

The main advantage of trading using opposite Starbucks Corp and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbucks Corp 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.
Starbucks Corp vs. Amazon Inc
The idea behind Starbucks Corp and Nike Inc 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.
Nike 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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