Correlation Between JD Sports and GlobalData PLC
Can any of the company-specific risk be diversified away by investing in both JD Sports and GlobalData PLC 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 GlobalData PLC 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 GlobalData PLC, you can compare the effects of market volatilities on JD Sports and GlobalData PLC 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 GlobalData PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and GlobalData PLC.
Diversification Opportunities for JD Sports and GlobalData PLC
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between JD Sports and GlobalData is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and GlobalData PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlobalData PLC 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 GlobalData PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlobalData PLC has no effect on the direction of JD Sports i.e., JD Sports and GlobalData PLC go up and down completely randomly.
Pair Corralation between JD Sports and GlobalData PLC
Assuming the 90 days trading horizon JD Sports Fashion is expected to generate 0.98 times more return on investment than GlobalData PLC. However, JD Sports Fashion is 1.02 times less risky than GlobalData PLC. It trades about -0.27 of its potential returns per unit of risk. GlobalData PLC is currently generating about -0.32 per unit of risk. If you would invest 10,280 in JD Sports Fashion on September 26, 2024 and sell it today you would lose (788.00) from holding JD Sports Fashion or give up 7.67% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
JD Sports Fashion vs. GlobalData PLC
Performance |
Timeline |
JD Sports Fashion |
GlobalData PLC |
JD Sports and GlobalData PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JD Sports and GlobalData PLC
The main advantage of trading using opposite JD Sports and GlobalData PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, GlobalData PLC 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 GlobalData PLC will offset losses from the drop in GlobalData PLC's long position.JD Sports vs. Young Cos Brewery | JD Sports vs. Tatton Asset Management | JD Sports vs. Games Workshop Group | JD Sports vs. Darden Restaurants |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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