Correlation Between JD Sports and Charter Communications

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

Diversification Opportunities for JD Sports and Charter Communications

-0.37

Correlation Coefficient

JD Sports  Charter Communications

Very good diversification

The 3 months correlation between JD Sports and Charter is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Charter Communications Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of JD Sports i.e., JD Sports and Charter Communications go up and down completely randomly.

Pair Corralation between JD Sports and Charter Communications

Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Charter Communications. In addition to that, JD Sports is 1.25 times more volatile than Charter Communications Cl. It trades about -0.01 of its total potential returns per unit of risk. Charter Communications Cl is currently generating about 0.0 per unit of volatility. If you would invest  38,029  in Charter Communications Cl on October 10, 2024 and sell it today you would lose (3,315) from holding Charter Communications Cl or give up 8.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.01%
Values	Daily Returns

JD Sports Fashion  vs.  Charter Communications Cl

JD Sports Fashion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD Sports Fashion has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Charter Communications

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications Cl are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Charter Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with JD Sports and Charter Communications

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

The idea behind JD Sports Fashion and Charter Communications Cl 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.

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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.