Correlation Between JD Sports and Regions Financial

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

Diversification Opportunities for JD Sports and Regions Financial

-0.5

Correlation Coefficient

JD Sports  Regions Financial

Very good diversification

The 3 months correlation between JD Sports and Regions is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Regions Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial Corp 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 Regions Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regions Financial Corp has no effect on the direction of JD Sports i.e., JD Sports and Regions Financial go up and down completely randomly.

Pair Corralation between JD Sports and Regions Financial

Assuming the 90 days trading horizon JD Sports Fashion is expected to generate 0.96 times more return on investment than Regions Financial. However, JD Sports Fashion is 1.04 times less risky than Regions Financial. It trades about -0.29 of its potential returns per unit of risk. Regions Financial Corp is currently generating about -0.4 per unit of risk. If you would invest  10,240  in JD Sports Fashion on October 6, 2024 and sell it today you would lose (824.00) from holding JD Sports Fashion or give up 8.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

JD Sports Fashion  vs.  Regions Financial Corp

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 uncertain 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.

Regions Financial Corp

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Regions Financial Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Regions Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with JD Sports and Regions Financial

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

The idea behind JD Sports Fashion and Regions Financial Corp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.