Correlation Between JD and Mister Car

Can any of the company-specific risk be diversified away by investing in both JD and Mister Car 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 and Mister Car into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JD Inc Adr and Mister Car Wash,, you can compare the effects of market volatilities on JD and Mister Car 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 with a short position of Mister Car. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD and Mister Car.

Diversification Opportunities for JD and Mister Car

0.77

Correlation Coefficient

JD  Mister Car

Poor diversification

The 3 months correlation between JD and Mister is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc Adr and Mister Car Wash, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mister Car Wash, and JD 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 Inc Adr are associated (or correlated) with Mister Car. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mister Car Wash, has no effect on the direction of JD i.e., JD and Mister Car go up and down completely randomly.

Pair Corralation between JD and Mister Car

Allowing for the 90-day total investment horizon JD Inc Adr is expected to generate 1.55 times more return on investment than Mister Car. However, JD is 1.55 times more volatile than Mister Car Wash,. It trades about 0.09 of its potential returns per unit of risk. Mister Car Wash, is currently generating about 0.07 per unit of risk. If you would invest  3,727  in JD Inc Adr on December 17, 2024 and sell it today you would earn a total of  589.00  from holding JD Inc Adr or generate 15.8% return on investment over 90 days.

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

JD Inc Adr  vs.  Mister Car Wash,

JD Inc Adr

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JD Inc Adr are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, JD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Mister Car Wash,

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mister Car Wash, are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Mister Car may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with JD and Mister Car

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

The idea behind JD Inc Adr and Mister Car Wash, 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.