Correlation Between Nike and Chemours

Can any of the company-specific risk be diversified away by investing in both Nike and Chemours 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 Chemours into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nike Inc and Chemours Co, you can compare the effects of market volatilities on Nike and Chemours 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 Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and Chemours.

Diversification Opportunities for Nike and Chemours

0.0

Correlation Coefficient

Nike  Chemours

Pay attention - limited upside

The 3 months correlation between Nike and Chemours is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours 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 Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of Nike i.e., Nike and Chemours go up and down completely randomly.

Pair Corralation between Nike and Chemours

Considering the 90-day investment horizon Nike Inc is expected to under-perform the Chemours. But the stock apears to be less risky and, when comparing its historical volatility, Nike Inc is 1.74 times less risky than Chemours. The stock trades about -0.07 of its potential returns per unit of risk. The Chemours Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,948  in Chemours Co on September 13, 2024 and sell it today you would lose (831.00) from holding Chemours Co or give up 28.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nike Inc  vs.  Chemours Co

Nike Inc

Risk-Adjusted Performance

0 of 100

Weak

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.

Chemours

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chemours Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Chemours exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nike and Chemours

The main advantage of trading using opposite Nike and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike position performs unexpectedly, Chemours 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 Chemours will offset losses from the drop in Chemours' long position.

The idea behind Nike Inc and Chemours Co 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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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 the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.