Correlation Between Nike and Good Vibrations

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

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

Diversification Opportunities for Nike and Good Vibrations

-0.78

Correlation Coefficient

Nike  Good Vibrations

Pay attention - limited upside

The 3 months correlation between Nike and Good is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and Good Vibrations Shoes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Good Vibrations Shoes 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 Good Vibrations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Good Vibrations Shoes has no effect on the direction of Nike i.e., Nike and Good Vibrations go up and down completely randomly.

Pair Corralation between Nike and Good Vibrations

Considering the 90-day investment horizon Nike Inc is expected to generate 0.33 times more return on investment than Good Vibrations. However, Nike Inc is 3.05 times less risky than Good Vibrations. It trades about 0.16 of its potential returns per unit of risk. Good Vibrations Shoes is currently generating about -0.13 per unit of risk. If you would invest  5,823  in Nike Inc on May 7, 2025 and sell it today you would earn a total of  1,659  from holding Nike Inc or generate 28.49% return on investment over 90 days.

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

Nike Inc  vs.  Good Vibrations Shoes

Nike Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nike Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting forward-looking signals, Nike exhibited solid returns over the last few months and may actually be approaching a breakup point.

Good Vibrations Shoes

Risk-Adjusted Performance

Very Weak

Over the last 90 days Good Vibrations Shoes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in September 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Nike and Good Vibrations

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

The idea behind Nike Inc and Good Vibrations Shoes 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 Commodity Directory module to find actively traded commodities issued by global exchanges.