Correlation Between Nike and Mazda

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

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

Diversification Opportunities for Nike and Mazda

0.65

Correlation Coefficient

Nike  Mazda

Poor diversification

The 3 months correlation between Nike and Mazda is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Mazda Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mazda Motor 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 Mazda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mazda Motor has no effect on the direction of Nike i.e., Nike and Mazda go up and down completely randomly.

Pair Corralation between Nike and Mazda

Considering the 90-day investment horizon Nike Inc is expected to generate 0.59 times more return on investment than Mazda. However, Nike Inc is 1.69 times less risky than Mazda. It trades about -0.01 of its potential returns per unit of risk. Mazda Motor is currently generating about -0.07 per unit of risk. If you would invest  7,939  in Nike Inc on September 15, 2024 and sell it today you would lose (143.00) from holding Nike Inc or give up 1.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Nike Inc  vs.  Mazda Motor

Nike Inc

Risk-Adjusted Performance

0 of 100

Very 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.

Mazda Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mazda Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Nike and Mazda

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

The idea behind Nike Inc and Mazda Motor 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.