Correlation Between JD Sports and American Business

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

Diversification Opportunities for JD Sports and American Business

0.0

Correlation Coefficient

JD Sports  American Business

Pay attention - limited upside

The 3 months correlation between JDDSF and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and American Business Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Business 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 American Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Business Corp has no effect on the direction of JD Sports i.e., JD Sports and American Business go up and down completely randomly.

Pair Corralation between JD Sports and American Business

If you would invest  0.01  in American Business Corp on December 20, 2024 and sell it today you would earn a total of  0.00  from holding American Business Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

JD Sports Fashion  vs.  American Business Corp

JD Sports Fashion

Risk-Adjusted Performance

Very Weak

Over the last 90 days JD Sports Fashion has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

American Business Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Business Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, American Business is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with JD Sports and American Business

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

The idea behind JD Sports Fashion and American Business 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.