Correlation Between JD SPORTS and Perdoceo Education

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

By analyzing existing cross correlation between JD SPORTS FASH and Perdoceo Education, you can compare the effects of market volatilities on JD SPORTS and Perdoceo Education 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 JD SPORTS with a short position of Perdoceo Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and Perdoceo Education.

Diversification Opportunities for JD SPORTS and Perdoceo Education

-0.89

Correlation Coefficient

JD SPORTS  Perdoceo Education

Pay attention - limited upside

The 3 months correlation between 9JD and Perdoceo is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and Perdoceo Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perdoceo Education and JD SPORTS 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 JD SPORTS FASH are associated (or correlated) with Perdoceo Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perdoceo Education has no effect on the direction of JD SPORTS i.e., JD SPORTS and Perdoceo Education go up and down completely randomly.

Pair Corralation between JD SPORTS and Perdoceo Education

Assuming the 90 days horizon JD SPORTS FASH is expected to under-perform the Perdoceo Education. In addition to that, JD SPORTS is 1.27 times more volatile than Perdoceo Education. It trades about -0.02 of its total potential returns per unit of risk. Perdoceo Education is currently generating about 0.07 per unit of volatility. If you would invest  1,522  in Perdoceo Education on September 28, 2024 and sell it today you would earn a total of  958.00  from holding Perdoceo Education or generate 62.94% return on investment over 90 days.

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

JD SPORTS FASH  vs.  Perdoceo Education

JD SPORTS FASH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD SPORTS FASH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady 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.

Perdoceo Education

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perdoceo Education are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Perdoceo Education reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JD SPORTS and Perdoceo Education

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

The idea behind JD SPORTS FASH and Perdoceo Education 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.