Correlation Between JD SPORTS and Nippon Light
Can any of the company-specific risk be diversified away by investing in both JD SPORTS and Nippon Light 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 Nippon Light 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 Nippon Light Metal, you can compare the effects of market volatilities on JD SPORTS and Nippon Light 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 Nippon Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and Nippon Light.
Diversification Opportunities for JD SPORTS and Nippon Light
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 9JD and Nippon is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and Nippon Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Light Metal 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 Nippon Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Light Metal has no effect on the direction of JD SPORTS i.e., JD SPORTS and Nippon Light go up and down completely randomly.
Pair Corralation between JD SPORTS and Nippon Light
Assuming the 90 days horizon JD SPORTS FASH is expected to generate 1.89 times more return on investment than Nippon Light. However, JD SPORTS is 1.89 times more volatile than Nippon Light Metal. It trades about -0.01 of its potential returns per unit of risk. Nippon Light Metal is currently generating about -0.03 per unit of risk. If you would invest 131.00 in JD SPORTS FASH on October 10, 2024 and sell it today you would lose (19.00) from holding JD SPORTS FASH or give up 14.5% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
JD SPORTS FASH vs. Nippon Light Metal
Performance |
Timeline |
JD SPORTS FASH |
Nippon Light Metal |
JD SPORTS and Nippon Light Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JD SPORTS and Nippon Light
The main advantage of trading using opposite JD SPORTS and Nippon Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS position performs unexpectedly, Nippon Light 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 Nippon Light will offset losses from the drop in Nippon Light's long position.JD SPORTS vs. FAIR ISAAC | JD SPORTS vs. Brockhaus Capital Management | JD SPORTS vs. Q2M Managementberatung AG | JD SPORTS vs. SYSTEMAIR AB |
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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 Stocks Directory module to find actively traded stocks across global markets.
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