Correlation Between JD SPORTS and Altria

Can any of the company-specific risk be diversified away by investing in both JD SPORTS and Altria 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 Altria 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 Altria Group, you can compare the effects of market volatilities on JD SPORTS and Altria 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 Altria. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and Altria.

Diversification Opportunities for JD SPORTS and Altria

-0.86

Correlation Coefficient

JD SPORTS  Altria

Pay attention - limited upside

The 3 months correlation between 9JD and Altria is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and Altria Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altria Group 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 Altria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altria Group has no effect on the direction of JD SPORTS i.e., JD SPORTS and Altria go up and down completely randomly.

Pair Corralation between JD SPORTS and Altria

Assuming the 90 days horizon JD SPORTS FASH is expected to under-perform the Altria. In addition to that, JD SPORTS is 3.39 times more volatile than Altria Group. It trades about -0.18 of its total potential returns per unit of risk. Altria Group is currently generating about 0.01 per unit of volatility. If you would invest  4,962  in Altria Group on October 10, 2024 and sell it today you would earn a total of  13.00  from holding Altria Group or generate 0.26% 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.  Altria Group

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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Altria Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altria Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Altria unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JD SPORTS and Altria

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

The idea behind JD SPORTS FASH and Altria Group 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.