Correlation Between JD Sports and Qurate Retail
Can any of the company-specific risk be diversified away by investing in both JD Sports and Qurate Retail 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 Qurate Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JD Sports Fashion and Qurate Retail Series, you can compare the effects of market volatilities on JD Sports and Qurate Retail 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 Qurate Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Qurate Retail.
Diversification Opportunities for JD Sports and Qurate Retail
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between JD Sports and Qurate is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Qurate Retail Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qurate Retail Series 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 Fashion are associated (or correlated) with Qurate Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qurate Retail Series has no effect on the direction of JD Sports i.e., JD Sports and Qurate Retail go up and down completely randomly.
Pair Corralation between JD Sports and Qurate Retail
Assuming the 90 days trading horizon JD Sports Fashion is expected to generate 0.47 times more return on investment than Qurate Retail. However, JD Sports Fashion is 2.13 times less risky than Qurate Retail. It trades about -0.01 of its potential returns per unit of risk. Qurate Retail Series is currently generating about -0.02 per unit of risk. If you would invest 12,615 in JD Sports Fashion on September 23, 2024 and sell it today you would lose (3,115) from holding JD Sports Fashion or give up 24.69% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 99.6% |
Values | Daily Returns |
JD Sports Fashion vs. Qurate Retail Series
Performance |
Timeline |
JD Sports Fashion |
Qurate Retail Series |
JD Sports and Qurate Retail Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JD Sports and Qurate Retail
The main advantage of trading using opposite JD Sports and Qurate Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, Qurate Retail 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 Qurate Retail will offset losses from the drop in Qurate Retail's long position.JD Sports vs. Samsung Electronics Co | JD Sports vs. Samsung Electronics Co | JD Sports vs. Hyundai Motor | JD Sports vs. Toyota Motor Corp |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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