Correlation Between FAT Brands and Nike
Can any of the company-specific risk be diversified away by investing in both FAT Brands 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 FAT Brands and Nike into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAT Brands and Nike Inc, you can compare the effects of market volatilities on FAT Brands 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 FAT Brands with a short position of Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAT Brands and Nike.
Diversification Opportunities for FAT Brands and Nike
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FAT and Nike is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding FAT Brands and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc and FAT Brands 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 FAT Brands 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 FAT Brands i.e., FAT Brands and Nike go up and down completely randomly.
Pair Corralation between FAT Brands and Nike
Considering the 90-day investment horizon FAT Brands is expected to under-perform the Nike. In addition to that, FAT Brands is 4.09 times more volatile than Nike Inc. It trades about -0.2 of its total potential returns per unit of risk. Nike Inc is currently generating about -0.11 per unit of volatility. If you would invest 7,429 in Nike Inc on September 2, 2025 and sell it today you would lose (966.00) from holding Nike Inc or give up 13.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAT Brands vs. Nike Inc
Performance |
| Timeline |
| FAT Brands |
| Nike Inc |
FAT Brands and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAT Brands and Nike
The main advantage of trading using opposite FAT Brands and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAT Brands 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.| FAT Brands vs. Vantage Drilling International | FAT Brands vs. Cleanaway Waste Management | FAT Brands vs. SD Standard Drilling | FAT Brands vs. InterContinental Hotels Group |
| Nike vs. Eagle Materials | Nike vs. HEALTHeUNIVERSE | Nike vs. Kossan Rubber Industries | Nike vs. Neo Performance Materials |
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 the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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