Correlation Between TT Electronics and JD SPORTS
Can any of the company-specific risk be diversified away by investing in both TT Electronics 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 TT Electronics and JD SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TT Electronics PLC and JD SPORTS FASH, you can compare the effects of market volatilities on TT Electronics 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 TT Electronics with a short position of JD SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of TT Electronics and JD SPORTS.
Diversification Opportunities for TT Electronics and JD SPORTS
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 7TT and 9JD is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding TT Electronics PLC and JD SPORTS FASH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD SPORTS FASH and TT Electronics 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 TT Electronics PLC 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 FASH has no effect on the direction of TT Electronics i.e., TT Electronics and JD SPORTS go up and down completely randomly.
Pair Corralation between TT Electronics and JD SPORTS
Assuming the 90 days trading horizon TT Electronics PLC is expected to generate 1.53 times more return on investment than JD SPORTS. However, TT Electronics is 1.53 times more volatile than JD SPORTS FASH. It trades about 0.17 of its potential returns per unit of risk. JD SPORTS FASH is currently generating about -0.18 per unit of risk. If you would invest 90.00 in TT Electronics PLC on October 6, 2024 and sell it today you would earn a total of 32.00 from holding TT Electronics PLC or generate 35.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
TT Electronics PLC vs. JD SPORTS FASH
Performance |
Timeline |
TT Electronics PLC |
JD SPORTS FASH |
TT Electronics and JD SPORTS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TT Electronics and JD SPORTS
The main advantage of trading using opposite TT Electronics and JD SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TT Electronics 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's long position.TT Electronics vs. FONIX MOBILE PLC | TT Electronics vs. Shenandoah Telecommunications | TT Electronics vs. MOLSON RS BEVERAGE | TT Electronics vs. BOSTON BEER A |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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