Correlation Between JD SPORTS and LendingTree

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

Diversification Opportunities for JD SPORTS and LendingTree

0.84

Correlation Coefficient

JD SPORTS  LendingTree

Very poor diversification

The 3 months correlation between 9JD and LendingTree is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and LendingTree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LendingTree 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 LendingTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LendingTree has no effect on the direction of JD SPORTS i.e., JD SPORTS and LendingTree go up and down completely randomly.

Pair Corralation between JD SPORTS and LendingTree

Assuming the 90 days horizon JD SPORTS is expected to generate 486.0 times less return on investment than LendingTree. But when comparing it to its historical volatility, JD SPORTS FASH is 1.41 times less risky than LendingTree. It trades about 0.0 of its potential returns per unit of risk. LendingTree is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,920  in LendingTree on October 2, 2024 and sell it today you would earn a total of  799.00  from holding LendingTree or generate 27.36% return on investment over 90 days.

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

JD SPORTS FASH  vs.  LendingTree

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 fragile 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.

LendingTree

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LendingTree has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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.

Pair Trading with JD SPORTS and LendingTree

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

The idea behind JD SPORTS FASH and LendingTree 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.