Correlation Between Deutsche Post and JD Sports

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

By analyzing existing cross correlation between Deutsche Post AG and JD Sports Fashion, you can compare the effects of market volatilities on Deutsche Post and JD Sports 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 Deutsche Post with a short position of JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Post and JD Sports.

Diversification Opportunities for Deutsche Post and JD Sports

0.91

Correlation Coefficient

Deutsche Post  JD Sports

Almost no diversification

The 3 months correlation between Deutsche and JD Sports is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Post AG and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion and Deutsche Post 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 Deutsche Post AG are associated (or correlated) with JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Deutsche Post i.e., Deutsche Post and JD Sports go up and down completely randomly.

Pair Corralation between Deutsche Post and JD Sports

Assuming the 90 days trading horizon Deutsche Post AG is expected to under-perform the JD Sports. But the stock apears to be less risky and, when comparing its historical volatility, Deutsche Post AG is 2.09 times less risky than JD Sports. The stock trades about -0.05 of its potential returns per unit of risk. The JD Sports Fashion is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  10,486  in JD Sports Fashion on October 7, 2024 and sell it today you would lose (1,070) from holding JD Sports Fashion or give up 10.2% of portfolio value over 90 days.

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

Deutsche Post AG  vs.  JD Sports Fashion

Deutsche Post AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Post AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

JD Sports Fashion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD Sports Fashion has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Deutsche Post and JD Sports

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

The idea behind Deutsche Post AG and JD Sports Fashion 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.